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The Aim 100: Part 2

We continue our review of the junior market’s largest companies
April 29, 2016

We hope you enjoyed last week’s run-through of the first 50 of Aim’s largest companies – or, more accurately, 49, after the completed takeover of KBC Advanced Technologies left the index one company short. As we count down the top 50, we find ourselves light of another company, this time the result of the advance of Vietnam-focused investment trust Vinacapital to the main market on 30 March.

Vinacapital is one of nine companies to make the transition since the start of April 2015, following a path that approaching 150 companies have taken since 1998. Whether Vinacapital’s move is a success remains to be seen – we’ve given our thoughts on its prospects in this feature even though it’s no longer a constituent of Aim. But it is certainly not a transition that guarantees a successful future. A quick scan of the list reveals names that have since lost most of their value – many of them resource explorers – and at least a dozen that have collapsed altogether.

Let’s not focus on the negatives, though, because there are just as many examples of Aim-to-main market moves that have paid off handsomely – particular highlights include Booker (valued at £525m on transfer, now worth £2.9bn), Domino’s Pizza (£361m then, £1.6bn now), and perhaps most spectacularly student accommodation specialist Unite – valued at £1.4bn it’s now worth 15 times more than when it transferred in April 2000. I wouldn’t go as far as suggesting that buying companies when they transfer to Aim makes for a good strategy, because many do subsequently produce negative returns. But they’re certainly worth casting a critical eye over.

Meanwhile, at least 325 companies have made the move in the opposite direction. In many cases this is a less ambitious move, and it would be fair to say that such a transition often represents a last roll of the dice for troubled companies attempting to save a few quid with Aim’s lower listing costs (like JJB Sports, for example). Yet some companies have subsequently thrived in the lower leagues – including the aforementioned KBC and most notably carpet-maker Victoria, which after switching to Aim in 2013 has seen its value multiply 18 times. At least 15 of the top 100 were once fully listed, including one of my long-time favourites, soft drinks maker Nichols, which has grown its market value tenfold to nearly half a billion since switching in 2004. Again, you’d be hard pushed to make a consistent strategy out of this. But what it does tell us is that going down a market does not mean downsizing your returns, because there is much quality on Aim.

There have been two replacements in the Aim 100 not covered in this feature. One is Quartix, which has been generating steady profits and cash flow from its vehicle-tracking systems – noting that it was set to benefit from new trucking legislation in the US we tipped its shares just over a year ago, advice that has come very good indeed with the shares more than doubling since. Joining it is Allergy Therapeutics, which makes good money selling pollen antihistamines, and is developing products to tap into the huge food allergy market. It was, in fact, our best performing tip of 2014 – further evidence that Aim is not a market to be sneezed at.

For the full run down click on the links below:

The Aim 100: 100-91

The Aim 100: 90-81

The Aim 100: 81-71

The Aim 100: 70-61

The Aim 100: 60-51

The Aim 100: 50-41

The Aim 100: 40-31

The Aim 100: 30-21

The Aim 100: 20-11

The Aim 100: 10-1