AIM delivers a mixed bag for investors at the mid-year

Thursday, Jul 26 2012 by
AIM delivers a mixed bag for investors at the midyear

The top two best performing stocks on the Alternative Investment Market during the first half of 2012 were West African Minerals (LON:WAFM) and Magnolia Petroleum (LON:MAGP), which each delivered impressive triple digit percentage price increases despite unforgiving market conditions. Indeed, while the value of AIM’s market capital soared during the first two months of the year, it went on to unravel in spectacular fashion, leaving the market close to its 12-month low at the half-year mark. 

Top performers 

Stock volatility was never a concern for investors in West African Minerals, which delivered a 555 percent price rise – from around 10p to 70.5p – in the six month period. Directors Stephen Dattels and Jim Mellon have form for extracting impressive returns from mining ventures (in 2007 Dattels sold Canadian company Uramin to French group Areva for US$2.5bn). This time, the focus is on iron ore licences in Cameroon and Sierra Leone. While the stock soared without so much as a drilling rig in sight, the company cemented the rise with a 55p share issue in June, which raised £5.6 million. The shares went on to touch 90p in early July but have since edged lower. 

Meanwhile, shares in US exploration and production group Magnolia Petroleum rose from 0.5p to 2.5p during the first half – a 306% increase for investors. Magnolia’s focus is the Bakken and Three Forks Sanish plays in North Dakota, and the Mississippi Lime, Woodford / Hunton formations in Oklahoma. It typically farms-in to very modest stakes in development wells but gets involved in a lot of them (it had interests in 74 wells at the end of 2011). Over time, Magnolia plans to increase both the number of wells and the equity interest in each one. 

AIM’s churn rate improves 

In terms of the overall market, there are currently 1,133 companies on AIM of which 436 have seen their prices rise since the start of the year, 74 are unchanged and 623 have lost ground. In the first six months, 55 companies departed while 29 joined but analysts claim the numbers reflect an improving picture in spite of the ongoing economic uncertainty in the Eurozone. Indeed, as many as 73 companies per quarter left AIM during the peak of the recession. 

What’s working for investors? …

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Magnolia Petroleum Plc is a holding company, which provides direction and other services to its subsidiaries. The Company's geographical segments include the United Kingdom (UK) and the United States of America (USA). It is engaged in oil and gas production and exploration in the United States. It is focused on acquiring and developing leases in the United States onshore formations. The Company has approximately 146 wells. Its projects include Bakken/Three Forks Sanish Formation in North Dakota, Woodford/Hunton oil formations in Oklahoma, and Mississippi Lime Play. The Bakken/Three Forks Sanish Interests target the Bakken formation, which comprises approximately three separate reservoirs, and the three Forks Sanish Formation. The Company holds leases in respect of approximately 67,200 gross mineral acres, giving rights to participate in the drilling of wells located in central Oklahoma. The Company holds leases covering approximately 5,500 net mineral acres in Mississippi Lime. more »

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