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These concepts are used, as an example, by an investor or a company's Board of Directors to describe how active they are in the day-to-day operations of the business.
"Hands-on" means that they are active in the management of the business -- sometimes even in operational issues -- while "hands-off" means that they let the company's management run the business. The concepts can also describe how a supervisor runs his or her business area and that person's methods of giving orders to those who report to her/him.
Upturn on a securities exchange, the market prices rise. From the French "hausse" which means increase. Opposite of "baisse" (downturn). See also "Bull market".
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Means to reduce risk and protect an investment with the help of another, counteracting financial instrument. The concept "hedge" is said to derive from the time when farmers in the English countryside protected their crops by planting hedges around their fields.
There are a number of devices for hedging, for instance derivatives, options, and futures. An investor (for example a hedge fund) can protect its investments in shares from a general downturn in the securities market by using "short selling" (see link below). If the market price goes down, the investor loses on its initial shareholding but makes a profit on the shares which have been shorted.
An export-oriented business with customer receivables in, say, USD, can hedge by using currency futures contracts by which the company obtains a right to sell USD on a specific day and at a specific price set in advance.
Example:
A French company sells a production machine to the USA for $2M (two million dollars) with a 60-day credit period for the customer. The rate of exchange at the time of delivery is €1.30/USD, which means that the customer receivable is worth €2.6M (2.6 million Euro). The company's bank offers the company a futures assurance which provides protection against a weakening in the USD by providing that it will buy USD in 60 days at €1.28. Since this is a significant customer receivable, the company chooses to hedge 50%. The futures contract means that the company will be forced to sell, and the bank forced to buy, in 60 days, 1 MUSD (50% of the total) at the exchange rate of €1.28/USD.
Assume that the exchange rate falls to €1.21/USD by the time that the customer pays. The company now sells half of the 2MUSD that it was paid for €1.28/USD. The rest is exchanged at the rate of €1.21/USD. In total the company receives €1.28M + €1.21M = €2.49M. If the company had not hedged and had instead exchanged the 1 MUSD at €1.21, the company would have received €2.42M. The company thus profited to the extent of €70,000 by means of the currency futures contract (leaving aside fees to the bank).
In this example, the company chooses not to hedge the whole amount. It is desirable to have an upside in case the USD strengthens against the Euro. If the company hedges the whole amount of 2 MUSD and the exchange rate of the USD rises to €1.32/USD the company will have to sell at an exchange rate of €1.28. The company will thus lose €2.64M - €2.56M or €80,000.
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A "hockey stick" is a prediction in which the sales curve in a business follows the blade of a hockey stick so that in a near future the curve will radically turn upwards and follow the shaft of the stick. Hockey stick predictions are most common in start-up companies which do not have any historical sales to look at.
The optimistic prediction is made so as to sell the company's future more than its past, with the aim of increasing the company's value, for instance in conjunction with a new issuance in which new owners will be offered an opportunity to buy shares in the company.
In start-up phases, the owners, the Board of Directors and the management are often altogether too optimistic about the potential sales growth. But experienced investors are very sceptical about optimistic predictions, and would rather value the company as following a stick which is lying down, where the increase in sales follows the shaft and not the blade.
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A Holding Company is a company whose purpose is to hold shares in one or more subsidiaries. Another name for it is "management company". A holding company most often owns more than 50% of the shares in its subsidiaries so as to have majority influence and control. The holding company is usually not an operational company directly involved in the operation of the business, but there is no obstacle to prevent its running its own businesses.
Venture Capitalists and Private Equity investors usually establish a new holding company when making an investment. It is the holding company which is financed in order to buy the operating company and which formally appears as the new owner. This means that a Venture Capital company and its funds do not directly own the shares in the operating (target) company, but instead that ownership is accomplished via a holding company.
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A hostile acquisition of an enterprise which is not approved of by the owners, the Board of Directors or the management. It is experienced as particularly hostile if an aggressive competitor is the buyer.
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