Hostile takeover

A hostile takeover is when a person, people, or a company tries to take control of a company without the approval of their management or board. It is an aggressive form of mergers and acquisitions. The acquiring person, people or company seeks to own more than 50% of the target company’s voting shares, which means they have controlling ownership of company decisions. This can occur if the targeted company is undervalued, or if activist shareholders want changes to the direction of the company. Methods for a hostile takeover include tender offers - buying shares at a premium - and proxy fights - replacing current management. To defend against hostile takeovers, companies may use strategies like differential voting rights, employee stock ownership programs, or poison pills. Read about a failed attempt at the hostile takeover of Disney.

The total number of shares an investor owns in a company or ETF is referred to as a shareholding or holding. The combined shareholdings, which is all the shares they own, is their portfolio. Investors with shareholdings are shareholders.

A holder identification number (HIN) identifies a shareholder as the legal owner of their entire portfolio of ASX holdings on the CHESS subregister. The same HIN is used for all of the shareholders’ shares registered on CHESS. Read more about the CHESS subregister here.

A holder number (HN) is a unique identifying number assigned to investors who buy shares on the NZX through an investing platform rather than a broker. It specifically identifies each shareholder as the owner of a particular portfolio of securities or shares. Companies listing on the NZX may choose to issue shares through ComputerShare or Link Market Services, so an investor’s HN is specific to one of these registries. Shareholders with investments across both registries - as with a CSN - may have more than one HN. An HN and a CSN have similar purposes but are not quite the same. Both are unique identifiers used by the NZX. The HN specifically identifies a shareholder as the owner of a portfolio of securities, while the CSN is common to the NZX, and distinguishes one investor’s holdings from another’s. Learn more about holder numbers (HN) on MoneyHub.

Hedging is an investment strategy that aims to reduce risk by taking an offsetting position in another asset. So if one investment has a sudden price change, hedging may help to lessen the impact. A hedge fund might use derivatives to offset potential losses in stocks. Or if an investor holds stocks and thinks there may be a market downturn ahead, they might use hedging techniques, such as options or futures, to minimise their potential losses. The goal of hedging is to achieve stable returns, regardless of share market or economic conditions. While hedging can provide a safety net, it can be complex and costly.

A hedge fund is an investment pool managed by active fund managers that use a range of investment strategies aiming for high returns. Unlike mutual funds, hedge funds can invest in a mix of assets, including stocks, bonds, derivatives and real estate. They often use leverage and short-selling investing techniques. Wealthy investors and financial institutions often use hedge fund managers hoping to generate profits regardless of whether share markets are going up or down - that is, whether it’s a bear market or a bull market.