Morning everyone, Ben here. Just stepping in to get today's SCVR rolling... bring on the comments and anything else that's on your mind this morning. Roland has joined in further down the report to help out, too.
(The last time I tried this, it did eventually crossover with Paul so forgive me if it's a bit of a bumpy ride).
I’m a bit late to the party with this news (what with holidays etc, *eyeroll*) but I do like the occasional updates from advisers like UHY Hacker Young, picking apart some of the trends on the Alternative Investment Market. Cutting to the chase, it looks like the very long and gradual trend towards better quality companies on AIM is continuing.
Perhaps a little unfairly, most of UHY’s comparisons look back to what was going on 10 years ago. Back then, of course, the financial crisis had sent AIM into a spin and things were only just starting to recover. But the figures are still quite interesting. A decade ago there were 275 delistings from AIM, as the market haemorrhaged firms that couldn’t justify the fees or raise new money. By comparison, in the last year, there were 66 delistings, which… I don’t know… still feels quite high.
Another interesting figure is that the average market cap of an AIM stock has risen nearly four-fold over the past 10 years to £98.9m in 2018, up from £24.3m in 2008. Those averages will be skewed by some of the very large groups that have emerged on the index over that time - Boohoo, Fevertree, Abcam, Hutchison China. But of course, big doesn’t necessarily mean safe. Until recently, Burford Capital was up there as one of the largest-cap stocks on AIM - before the recent ‘bear attack’, which slashed its share price.
As someone who used to interview the management teams of oil and gas companies back in the early/mid-2000s, I can vouch for how different things were pre-financial crisis. That makes me sound very old, but it is quite striking how the balance has changed. Back then, the oil price - and mining/ commodity prices generally - had quite an influence on the trajectory of the index. Obviously those sectors are still important, but far less so now.
So while the quality seems to be improving - size is up, delistings are down, trading…
