Guide to Analysing Companies

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HISTORIC COST
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Holding company
A company set up to hold the shares of other companies.
These would become subsidiaries if the holding company
owned 51% or more of them. Holding companies are often set
up in jurisdictions where taxes are lower or regulations are
more lax (for instance, an offshore haven like the Cayman
Islands). Such tactics are frowned upon in the United States,
even though corporations there often establish holding compa-
nies in states that are friendly to business (for example,
Delaware).
Home banking
Banking done at home by individuals via the telephone or the
internet. account holders can thus move money between ac-
counts, pay bills or simply check their balance more or less
when they want to and without having to queue up for the
privilege. The only time people really need to go to a bank’s
branch is when they have to deposit large amounts of cash;
otherwise everything can be done from afar. This has given fi-
nancial organisations without branch networks a big cost ad-
vantage. And as banks cut back their branch networks, so more
people are likely to switch to home banking.
Hostile bid
A takeover bid by one company for another in which the
second company resists the takeover attempt. There are various
weapons at its disposal. The most orthodox is to persuade the
shareholders that they will be better off in future without being
taken over. This usually involves showing how the company
will grow and thus increase the value of its business for share-
holders. A target company can also appeal to a white knight,
another company often in the same industry with which it
could do a deal that would maintain some or all of its indepen-
dence. Until their use became frowned upon, companies in the