Guide to Analysing Companies

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PROVISIONS
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Proxy
A vote delegated to somebody else (particularly at company
meetings) by the person authorised to exercise it. Proxies are
used by shareholders who are unable to attend a company’s
annual meeting. In this case, they sign a form delegating their
right to vote (according to the number of shares they hold) to
somebody else, usually a director of the company. Proxy fights
break out when a group of shareholders tries to gain control of
the votes of other shareholders in order to force their point of
view on to the meeting, or to vote their own representatives on
to the board of directors.
Put option
An option that gives the right to sell a fixed number of secu-
rities at a specified price (the strike price) within a specified
period of time. In return for this right, the buyer of a put option
pays a premium. If the holder fails to exercise the option by
the due date, it expires worthless. Buyers of put options gener-
ally hope that the price of the underlying security will drop in
price. They will then be able to sell the security to the seller, or
writer, of the put option for the agreed price and then pocket
the difference between this price and what it costs to buy. Con-
trast with call option.
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Qq
Qualitative analysis
An analysis that concentrates on the touchy-feely aspects of a
company’s track record and reputation, such as the calibre and
experience of the chief executive or the breadth of the board’s
vision. Usually combined with, but to be distinguished from,
quantitative analysis, to form a rounded judgment.
Quant
Shorthand for an analyst with above-average mathematical
and computer skills who crunches numbers to test investment
hypotheses.