Fixed Income Arbitrage: An arbitrage that takes advantage of mis-pricing and distortions in value between two securities. Arbitrage profit opportunities often exist because different participants have different objectives, constraints, market outlook and skill level. Yield spreads between fixed income securities often provide arbitrage opportunities as market factors influence these relationships and produce value distortions. Various fixed income instruments such as Treasury bonds, corporate bonds, mortgage backed securities, derivatives etc. are utilized in an arbitrage situation.
Flipping: The act of buying shares in an IPO and selling them immediately for a profit. Brokerage firms underwriting new stock issues tend to discourage flipping, and will often try to allocate shares to investors who intend to hold on to the shares for some time. However, the temptation to flip a new issue once it has risen in price sharply is too irresistible for many investors who have been allocated shares in a hot issue.
Flotation: When a firm's shares start trading on a formal stock exchange, such as the NASDAQ or the NYSE. This is probably the most profitable exit route for entrepreneurs and their financial backers.
Follow-on funding: Companies often require several rounds of funding. If a private equity firm has invested in a particular company in the past, and then provides additional funding at a later stage, this is known as 'follow-on funding'.
Form 10-K: This is the annual report that most reporting companies file with the Commission. It provides a comprehensive overview of the registrant's business. The report must be filed within 90 days after the end of the company's fiscal year.
Form 10-KSB: This is the annual report filed by reporting "small business issuers." It provides a comprehensive overview of the company's business, although its requirements call for slightly less detailed information than required by Form 10-K. The report must be filed within 90 days after the end of the company's fiscal year.
Form S-2: This is a simplified optional registration form that may be used by companies that have been required to report under the '34 Act for a minimum of three years and have timely filed all required reports during the 12 calendar months and any portion of the month immediately preceding the filing of the registration statement. Unlike Form S-1, it permits incorporation by reference from the company's annual report to stockholders (or annual report on Form 10-K) and periodic reports. Delivery of these incorporated documents as well as the prospectus to investors may be required.
Fully Diluted Outstanding Shares: The number of shares representing total company ownership, including common shares and current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.
Fund of Funds: A fund that invests in a portfolio of hedge funds. The fund's portfolio may utilize a variety of investment styles, thus creating a diverse vehicle for investors. The benefits of a fund of funds include: professional management and monitoring, lower minimums, extensive due diligence prior to investments being made, and access to investment managers that may not be available otherwise.
Fund of funds: A fund set up to distribute investments among a selection of private equity fund managers, who in turn invest the capital directly. Fund of funds are specialist private equity investors and have existing relationships with firms. They may be able to provide investors with a route to investing in particular funds that would otherwise be closed to them. Investing in fund of funds can also help spread the risk of investing in private equity because they invest the capital in a variety of funds.
Fundamental Investment Analysis - Analysis that is company specific and often includes a focus on earnings, dividends and cash flow prospects. Consideration is also given to future interest rates and a risk evaluation of the company.