A ratio used to determine the value of a company. The enterprise multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include. Enterprise multiple is calculated as: Also known as the EBITDA Multiple. Taobiz explains Enterprise Multiple A low ratio indicates that a company might be undervalued. The enterprise multiple is used for several reasons: 1) It's useful for transnational comparisons because it ignores the distorting effects of individual countries' taxation policies. 2) It's used to find attractive takeover candidates. Enterprise value is a better metric than market cap for takeovers. It takes into account the debt which the acquirer will have to assume. Therefore, a company with a low enterprise multiple can be viewed as a good takeover candidate. Keep in mind that enterprise multiples can vary depending on the industry. Therefore, it's important to compare the multiple to other companies or to the industry in general. Expect higher enterprise multiples in high growth industries (like biotech) and lower multiples in industries with slow growth (like railways).
An investment philosophy that attempts to amplify the returns of an underlying portfolio or index fund while also minimizing the effects of tracking error. This type of investing is considered a hybrid between active and passive management and is used to describe any strategy that is used in conjunction with index funds for the purpose of outperforming a specific benchmark. Taobiz explains Enhanced Indexing For example, an investor can short sell poor performing stocks from an index and then use the funds to purchase shares of companies they expect will have high returns. Investors can substantially outperform a benchmark over long time horizons by consistently eliminating their exposure to poor performing stocks and by using the proceeds to invest in other securities.
An additional dividend paid to eligible stockholders when their divided income is reduced due to a change the board of directors makes to the dividend payment schedule. Taobiz explains Equalizing Dividend Equalizing dividends are paid to shareholders to compensate them for any dividend income lost from the change.
An instrument whose return is determined by the performance of a single equity security, a basket of equity securities, or an equity index. Taobiz explains Equity linked Note - ELN In the case of a note linked to an equity index, the security would typically be called an equity index-linked note.
A trading band composed of two moving averages, one of which is shifting upwards and the other shifting downwards. Taobiz explains Envelope These trading bands are used by technical analysts to define a stock's upper and lower boundaries. Signals to sell occur when the stock price reaches the upper band, and buy signals are generated when the price reaches the lower band. The reasoning behind the sell and buy signals is that stock prices tend to bounce off the bands. Even though buyers and sellers will temporarily pressure a stock's price to its extremes, it should re-stabilize to more realistic levels found within the envelope.
A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Also known as a "stock fund". Taobiz explains Equity Fund Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography: Size is determined by a company's market capitalization, while the investment style, reflected in the fund's stock holdings, is also used to categorize equity mutual funds. Stock funds are also categorized by whether they are domestic (U.S.) or international. These can be broad market, regional or single-country funds. There are so-called "specialty" stock funds that target business sectors such as healthcare, commodities and real estate.
The price at which an investor buys an investment. The entry point is usually a component of a predetermined trading strategy for minimizing investment risk and removing the emotion from trading decisions. Recognizing a good entry point is the first step in achieving a successful trade. Taobiz explains Entry Point For example, an investor researches and identifies an attractive stock, but feels that it is overpriced. He decides that when the price decreases to a certain level, he will buy. This is his entry point. Exercising patience and waiting for the right time to buy will help him earn better returns on his investments. Determining both an entry point and exit point in advance are important strategies for investors who want to maximize their returns.
The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. Also known as "share capital". Taobiz explains Equity Financing This is when a company raises money by issuing stock. The other way to raise money is through debt financing, which is when the company borrows money.
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