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Peel Hunt
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== Risks == As with any investment, investing in Peel Hunt carries a level of risk. Overall, based on the Peel Hunt adjusted beta (i.e. 0.86), the degree of risk associated with an investment in Peel Hunt is 'medium'. Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used the 25 available share price Peel Hunt data points. We note that the amount of available data observations for Peel Hunt is less than what's typically used in the five years of monthly data beta calculation (i.e. 25 observations vs. 60 observations), and accordingly, calculating the beta of such a company may be considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.50 and 1.50. Further information about the beta ratings can be found in the appendix section of this report. '''The key risks''' Investing in Peel Hunt LLP involves several key risks: # The group’s business and financial performance have been and will continue to be affected by general economic conditions in the UK and other jurisdictions in which the group operates and adverse developments in the UK or global financial markets could have a detrimental impact on its earnings and profitability.<ref name=":1">https://www.peelhunt.com/media/icneklr5/admission-document.pdf</ref> # The group relies on the ability to attract, develop and retain highly skilled personnel.<ref name=":1" /> # Damage to the group’s reputation could cause harm to the group and its business prospects.<ref name=":1" /> # The group’s business is subject to inherent risks concerning liquidity, and this may have an adverse effect on the group’s business and profitability.<ref name=":1" /> # The group’s results of operations may be materially affected by market fluctuations and significant changes in the value of financial instruments.<ref name=":1" /> # A failure in the group’s operational systems may disrupt the group’s business operations, result in regulatory action against the group, and adversely impact the group’s reputation, business, financial condition and results of operations.<ref name=":1" /> # The group is exposed to risks relating to its underwriting activities.<ref name=":1" /> # The group is subject to the credit risk of counterparties.<ref name=":1" /> # The group's framework and policies for risk management may prove inadequate for the risks faced by its business and any failure to properly manage the risks it faces could cause harm to the group and its business prospects.<ref name=":1" /> # Failure to, or perceived failure to, appropriately manage potential conflicts of interest can adversely affect the group’s business and reputation.<ref name=":1" /> # The group's competitive advantage depends in part on its information technology.<ref name=":1" /> # The group faces significant and increasing competition in the financial services industry, including in changing markets.<ref name=":1" /> # The group may be unable to successfully implement its business strategies.<ref name=":1" /> # The group may be unable to protect its intellectual property effectively from misappropriation by others, including current and potential competitors.<ref name=":1" /> # The group operates in an extensive, strict, and frequently changing regulatory landscape and any changes to, or the group’s failure to comply with, any laws and regulations could adversely affect the Group’s business, financial condition and results of operation.<ref name=":1" /> # If employees of the group fail to comply with applicable laws, rules and regulations, including those associated with conduct risk or fail to adapt its business to new laws and regulations, the group could be subject to disciplinary actions, fines and loss of licences to provide its services. <ref name=":1" /> # The group is subject to risks relating to litigation, investigations, claims and potential liabilities under laws and regulations applicable to financial services.<ref name=":1" /> # Regulatory and other changes resulting from the UK’s exit from the EU could impact the group’s results.<ref name=":1" /> # The group’s collection, use, storage, disclosure, transfer and other processing of personal information could give rise to significant costs and liabilities, including as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights, which may have a material and adverse impact on the group’s business, financial condition and results of operations.<ref name=":1" /> # The group is subject to anti-bribery and corruption and anti-money laundering laws and regulations and sanctions and embargo programmes.<ref name=":1" /> # The group may be negatively impacted by the failure of its information technology and communications systems and related operational processes, including through cyberattacks. <ref name=":1" /> # The group’s insurance coverage may not be adequate to cover all possible losses that it could suffer and its insurance costs may increase.<ref name=":1" /> # A change in taxation legislation, case law or practice of tax authorities or investigations by tax authorities in key jurisdictions could materially increase the group’s costs.<ref name=":1" /> # An active trading market for the ordinary shares may not develop or be sustained.<ref name=":1" /> # There are no guarantees that the company will pay dividends or regarding the level of any such dividends.<ref name=":1" /> # Substantial future sales of ordinary shares could impact their market price.<ref name=":1" /> # The market price of the ordinary shares may fluctuate significantly in response to a number of factors, many of which will be out of the company's control.<ref name=":1" /> # Future issues of new ordinary shares may dilute the holdings of shareholders.<ref name=":1" /> # Shareholders may be diluted as a result of future equity offerings to the extent they do not participate or are excluded from participating.<ref name=":1" /> # General risks of investing in shares traded on AIM.<ref name=":1" /> # Regulatory approvals are required to increase a shareholding in the company above certain percentage thresholds of its capital.<ref name=":1" />
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