Guide to Analysing Companies

Fruits and suits
A popular combination for the successful launch of an internet-
based initial public offering during the boom years of the
technology bubble. Fruits are net-wise individuals who wear
casual clothing and are not particularly savvy about finance.
Suits are numeric individuals who wear ties and convince their
investors that the combination of high-tech fruits and high-
finance suits will earn them a fortune. Such winning combina-
tions proved less appealing after the high-tech bubble burst at
the beginning of 2000, since when fruits are just as likely again
to wear suits and vice versa.
FSA
See financial services authority.
FSI
See financial services institution.
FTSE 100
A stock index introduced by the 
FINANCIAL TIMES
and the
F
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london stock exchange, known affectionately as the
Footsie, on January 1st 1984. It is a computerised index of 100 big
UK companies. The Footsie was designed to fill a gap between
the ft ordinary share index (started in 1935), which con-
tained a mere 30 companies, and the ft all-share index, which
contains hundreds and was then calculated only infrequently.
The Footsie has become by far the most widely followed
index on the London market. Companies are periodically in-
cluded or excluded depending on their stockmarket capi-
talisation as their fortunes wax and wane. Being included in
the index can have a big impact on a company’s share price
because, once it is included, tracker funds (which track the
market) are effectively obliged to buy the company’s shares in
proportion to its weight in the index. Conversely, if a company
is ejected from the index, trackers will invariably dispose of
their shares.
The first stock-index futures and options to be traded in
London were based on the Footsie. The index started life at a
level of 1,000. 
Fund manager
A firm or individual that manages other people’s money with
the aim of gaining a certain (and often minimum) return on it.
The industry is broadly divided into two: those who specialise
in managing institutional money – that is, funds placed with
them by financial institutions of one sort or another, often firms’
own pension funds; and those who specialise in managing
retail money – that is, the savings and investments of individual
investors. Fees on the latter are generally higher and therefore
more attractive, mainly because the money comes from lots of
smaller savers and is therefore more costly to administer.
There are also active and passive fund managers. Active
managers attempt to beat various benchmarks by managing
their portfolios of investments (which can be made up of
fixed-income securities as well as equities). Passive
managers aim only to track the same indices and so perform in
line with the market. Active managers rely on well-tried but still