Guide to Analysing Companies

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Allfinanz
An Anglo-German neologism for the coming together of banking
and insurance services under one institutional umbrella.
Many such institutions have been formed by merger or by a
joint venture between a bank and an insurance company.
Some (like Deutsche Bank) started what they lacked from
scratch (in this case forming an insurance company). The term
has since been embraced by many companies from Ireland to
New Zealand, offering everything from life assurance to tax
planning.
Allotment
The amount of stock allocated to each participant of a syndi-
cate formed by an investment bank to underwrite and dis-
tribute a new issue of shares. It can also be the amount of
stock allocated to each subscriber when such an issue is over-
subscribed.
Alpha
A mathematical estimate of the return to be expected from a
particular stock based on such things as the rate of growth of
the company’s earnings per share. To measure the
performance of a particular stock, it is assumed that the return
from the market as a whole is zero. So, for example, a stock with
an alpha of 1.25 would be expected to rise by 25% during a year
in which the market remained flat. A share whose price is low
compared with its alpha may therefore be considered good
value. Alpha can also be applied to a portfolio of invest-
ments, to measure how well or badly it has done compared
with how much risk it holds. A stock with a high alpha may or
may not also have a high beta, a measure of its volatility.
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Alpha stocks
The most actively traded shares on the London stockmar-
ket. All such stocks are traded under the stock exchange
automated quotations (seaq) system, and are guaran-
teed continuous two-way trading by market makers. The
number of alpha stocks may change from time to time as fash-
ions and markets dictate. Not to be confused with alpha or
beta.