An investment technique used to eliminate the risk of a single asset. In most cases, this means taking an offsetting position in that single asset. If this asset is part of a larger portfolio, the hedge will eliminate the risk of the one asset but will have less of an effect on the risk associated with the portfolio. Taobiz explains Micro-Hedge Say you are holding the stock of a company and want to eliminate the price risks associated with that stock. To offset your position in the company, you could take a short position in the futures market, thereby securing the stock price for the period of the futures contract. This strategy is used when an investor feels very uncertain about the future movement of a single asset.
Companies with market capitalizations between $50 million and $300 million. Taobiz explains Micro Cap A micro-cap stock isn't the smallest classification - nano cap is even smaller. Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition of these terms can vary between brokerage houses.
A perspective that defines the act of stealing confidential information from an employer and then trading securities based on the misappropriated insider knowledge. In the United States, a person guilty according to the misappropriation theory will likely be convicted of insider trading. Taobiz explains Misappropriation Theory The misappropriation theory gained prominence in the Supreme Court's conviction of James H. O'Hagan. O'Hagan was an attorney who acted on insider information regarding a takeover bid for Pillsbury. The United States versus O'Hagan was a watershed case for the theory, defining its validity. This take on insider trading expands the traditional view of what constitutes guilt. Instead of looking only at people who trade their own companies' shares based on stolen information, the theory extends to those who use the knowledge to profit in any corporation.
When a market fails or falls into crisis after an extended period of market speculation or unsustainable growth. A Minsky moment is based on the idea that periods of speculation, if they last long enough, will eventually lead to crises; the longer speculation occurs the worse the crisis will be. This crisis is named after Hyman Minsky, an economist and professor famous for arguing the inherent instability of markets, especially bull markets. He felt that long bull markets only ended in large collapses. Taobiz explains Minsky Moment The phrase "Minsky moment" was coined by Paul McCulley in 1998 while referring to the Asian Debt Crisis of 1997, in which speculators put increasing pressure on dollar-pegged Asian currencies until they eventually collapsed. These types of crises occur because investors take on additional risk during prosperous times or bull markets. The longer a bull market lasts, the more risk is taken in the market. Eventually, so much risk is taken that instability ensues. For example an investor might borrow funds to invest while the market is in an upswing. If the market drops slightly, leveraged assets might not cover the debts taken to acquire them. Soon after, lenders start calling in their loans. Speculative assets are hard to sell, so investors start selling less speculative ones to take care of the loans being called in. The sale of these investments causes an overall decline in the market. At this point, the market is in a Minsky moment. The demand for liquidity might even force the country's central bank to intervene.
An initial public offering in which a parent company spins off one of its subsidiaries or divisions, but retains a majority stake in the company after issuance. This means that after the public offering, the parent company will still have a controlling stake of the new public company. Watch: Initial Public Offering (IPO) Taobiz explains Minority IPO The parent company may retain this majority stake forever or may slowly dissolve their ownership over time. This type of IPO allows the company to raise funds, accessing the value of the subsidiary, to fund its own operation or return value to shareholders.
1. A significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company. 2. A non-current liability that can be found on a parent company's balance sheet that represents the proportion of its subsidiaries owned by minority shareholders. Taobiz explains Minority Interest 1. In accounting terms, if a company owns a minority interest in another company but only has a minority passive position (i.e. it is unable to exert influence), then all that is recorded from this investment are the dividends received from the minority interest. If the company has a minority active position (i.e. it is able to exert influence), then both dividends and a percent of income are recorded on the company's books. 2. If ABC Corp. owns 90% of XYZ inc, which is a $100 million company, on ABC Corp.'s balance sheet, there would be a $10 million liability in minority interest account to represent the 10% of XYZ Inc. that ABC Corp does not own.
A type of third-party offer made to a company's shareholders as an attempt to purchase the underlying shares. Unlike conventional tenders, mini-tenders usually involve less than 5% of a company's outstanding shares and typically represent a discount compared to the stock's current market price. Taobiz explains Mini-Tender Mini-tenders typically are frowned upon by the investment community because many of the procedures and regulations associated with tenders do not apply to them. Shareholders who are approached with a mini-tender should be extremely diligent in evaluating the offer, as the terms of the mini-tender may not necessarily be beneficial to the investor. For example, mini-tenders are not required to file any documentation with the SEC (such as the offer and information about the offering company), which makes disclosure an issue. Furthermore, most mini-tenders do not allow shareholders the right to withdraw from the mini-tender after initially agreeing to do so.
Italy's primary securities market, the Milan Stock Exchange (in Italian, Borsa Italiana) traces its origins to the 1808 establishment of Milan's Borsa di Commercio (commodities exchange). The first company share was listed in 1859, and banking and railway companies joined the exchange in the 1870s. Electronic trading became fully operational in 1994, and the Exchange became privatized in 1998. Taobiz explains Milan Stock Exchange (MIL) .MI In 2007, the Milan Stock Exchange merged with the London Stock Exchange to create one of the largest exchange groups in Europe, comparable in the number of listed companies (around 3,400 in 2008) to the BME Spanish Exchanges. Its main indexes are the capitalization-weighted S&P/MIB, which includes the index's 40 biggest companies over 10 sectors, and the MIBTEL.
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