Guide to Analysing Companies

parties and by insisting that all shareholdings above a certain
limit (often 5%) are made public. (See also hostile bid.)
Warrant
A certificate authorising the holder to buy a specified number of
shares in a company at a named price and within a specified
period of time. This is similar to shares issued as part of a
rights issue, except that the period of time in which a
warrant can be exercised is much longer. A warrant is also a
written instruction that makes legal a payment that would oth-
erwise be illegal.
Weighting
The multiplication of an average by factors that affect it in order
to take account of their importance. Thus investors talk of a
bond’s weighted average term to maturity as a measure of its
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remaining life. The term also refers to the proportion of a se-
curity or asset that an investment fund may hold in relation
to the benchmark against which its performance is measured.
So, for example, a fund specialising in Asian markets might be
overweight in Thailand if it held a greater share of securities
listed in that market than the msci index it was using as a
benchmark. (See also underweight.)
White knight
An investor who appears out of the blue to rescue a company that
is about to fall into the hands of a hostile suitor. In practice, white
knights rarely charge out of the blue and never without an incen-
tive. They are usually persuaded by a company that is subject to
a hostile bid (or its investment bank) to come to its rescue.
Window dressing
The process of dressing up a company’s accounts to make them
look as attractive as possible. (See balance sheet and
profit-and-loss account.) By sleight of hand and prac-
tised eye, accountants can enhance accounts by concealing and
revealing, just as in a shop window. It also refers to the practice
among fund managers and professional investors of dress-
ing up their figures at the end of the year to show them to best
advantage. This can boost stockmarket turnover at certain
times of the year.
Witching hour
The time when an event occurs that affects the whole of a se-
curities market; for example, the last hour before a widely
traded stock index option expires. Such events can cause
considerable volatility in market prices, exacerbated by
traders who try to anticipate the witching hour by hedging
against it. (See also triple witching hour.)