Hamster Wheel

(UK) The situation in a sub-critical mass business with no potential to reach critical mass. So-called because the managing director ends up accomplishing nothing and becoming very frustrated.

Hard Circle

Prospective purchasers of securities in a public offering, listed in the ‘book’ maintained by the lead managing underwriter, who are considered very likely to buy shares in the offering. See ‘Book or Syndicate Book.’

Hedge

A hedge is typically accomplished by making offsetting transactions that will largely eliminate one or more types of risk. Hedging investors can use derivatives and covered warrants to hedge investments. For instance, if an investor owns a particular stock, he or she can neutralize the impact of an impending fall in price by buying a put option, selling futures or buying a put warrant.

Hedge Fund

A private investment fund that invests in a variety of assets, utilizing investments and strategies with various long and short exposures and degrees of leverage.

High Yield Bonds

These play a similar role to mezzanine finance in bridging the gap between senior debt and equity. High Yield Bonds are senior subordinated notes not secured against the assets of the company, and thus attract a higher rate of interest than senior debt.

Highly Confident Letter

A letter from an investment bank indicating that it is highly confident that it will be able to raise financing for a transaction, but without legally obligating itself to do so.

Hi-Lo Index

Moving average of the number of stocks that reach new highs and lows each day, used as a technical analysis tool for measuring the strength of the overall market.

Hockey Stick Projections

The general shape and form of a chart showing revenue, customers, cash, or some other financial or operational measure that increases dramatically at some point in the future. Entrepreneurs often develop business plans with hockey stick charts to impress potential investors.

Holdback

A contractual condition in which money is withheld until a specified event occurs.

Holding Period

The length of time an investment remains in a portfolio. Can also mean the length of time an investment must be held in order to qualify for capital gains tax or certain securities law exemptions.

Horizon Internal Rate of Return or Horizon IRR

An indication of performance trends within an industry sector. Horizon IRR uses the beginning net asset values as an initial cash outflow and net asset values at the period end as the terminal cash flow. Through these values plus/minus any net interim cash flows, it calculates IRRs for the defined time period. See ‘IRR.’

Hostile Offer or Hostile Bid

An offer that is made for a target company but is not recommended for acceptance by shareholders by the board of the target company.

Hot Issue or Hot Stock

A security that quickly rises in price following its initial trading as a result of high market demand.

Hurdle Rate

A rate of return on investment after which economics of the investment are adjusted or capped.