This article was written by David O'Hara of Blackthorn Focus and first published in Aimzine.
I love AIM but like most things in life, it is not perfect. The London Stock Exchange's AIM market has come in for some fierce criticism from all corners: investors, advisors and the companies themselves have all voiced disappointment along the way. Any institution with such a high profile will be criticised. In a stock market, investors will often blame someone else for their losses and company executives typically harbour the conviction that their company is worth far more than the share price is telling them. The market itself is the ultimate judge, though, and its invisible hand continues to point companies and investors in AIM’s direction.
I’ve been investing in AIM shares for over five years. I know that isn’t long but I’m not very old. AIM launched when I was still at school I’d have needed one hell of a paper round before I could afford to invest in stocks.
AIM continues to change as markets, investors and companies’ expectations of a market evolve. All AIM companies will soon have to declare the full earnings of each individual director, a move which is to be welcomed.
I don’t see why change should stop there, however, and have detailed five things that AIM could do differently:
1. Make market expectations public: If there’s one thing I can’t stand it is a company referring to ‘market expectations’ in trading statements when access to these expectations is restricted. This amounts to a nudge and a wink to everyone who is unaware of simply what numbers the company is vaguely referring to. Some large cap companies deal with this properly (Barclays is one example) by publishing brokers’ consensus estimates on the Investor Relations section of their website. Trading statements should not carry more meaning for the house broker’s clients than they do for everyone else. To be sure, data aggregators exist, publishing consensus forecasts to anyone who takes the time to register on their site but brokers are under no obligation to send their estimates to sites such as Hemscott. AIM Rule 26 requires that major shareholders are detailed on a company’s website. The figures management are referencing in trading statements are surely more important to a fair and orderly market than a declaration of who owns 3% of a company.