Taking AIM

Shitty companies with little regulation and crappy returns. I'm in!

Taken as a whole, the performance of London’s Alternative Investment Market (AIM) has sucked. Here’s a screen shot from the FT comparing trailing 5 year returns for the AIM 100 (dark green line) vs. the S&P 500 and the FTSE 100.

AIM listed businesses are regulated by the London Stock Exchange, and not subject to the national and international standards imposed by the FCA. It’s a nursery for growing businesses, some of which will graduate to the Main Market (as did Domino’s Pizza Group, Entain, Melrose, and ASOS). Given the light touch regulation, it also houses plenty of shite and probably a few scams.

The plan

Running a screen on Koyfin, I get 586 securities with a primary listing on the AIM. The average market cap is £99m. The average EV is £105m. The average trailing 10Y ROIC is a staggeringly shit -2%.

That reminds me of an old joke:

An investor was looking out of his window into his garden, where a huge pile of manure sits steaming and ready for spreading. To his dismay he sees his young daughter on hands and knees scrabbling through the turd with her bare hands. Alarmed, he runs outside and pulls her from the filth, screaming “Sweetie, what the hell are you doing!?!?!’’ To which she replies calmly, “Daddy, there’s so much shit here, there’s just got to be a pony.”

The plan is to go through this pile of shit and see how many ponies we find.

Care to join me for the ride?