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Acuere, you are correct, there are no FT-SE AIM tracker funds. That is because compared the main FT-SE indices, there is little money to be made in an index that tracks a basket of AIM shares selected purely by their MCap. Too many funds have failed in the past, as although there are many AIM shares that rocket such as Boohoo, Asos or Fever Tree, about which we have recently read so much, too many AIM listed stocks go bust, simply languish or fizzle to near nothing which brings down the basket average.
Instead, institutional investors need to spend time researching and picking wisely. However, there is another big problem for them. They cannot invest in shares who's MCap is too low, no matter how much the share looks undervalued and may multiply. Many funds are in the billions. If they have a minimum spend of say £50m, to make it worth their while, there is no way that they can invest in a share whose MCap is a mere £200m or so. There would simply no be enough liquidity to buy this many shares (who is going to sell them?).
This is why Novacyt is now ripe and ready for Institution Investors to pick. It has been showing promise for some time and has started to show profit for a sustained period, brokers have done the research and are now spreading the word. But most importantly, it is just becoming big enough for large institutions to be able to invest some serious money.
Join the dots... GLA, £1bn, SP 15 - any moment now!
I commented here that with Ncyt now the 15th largest company on Aim, it was a formality that it would enter the FTSE Aim 100 and that Aim 100 Tracker Funds would have to invest.
So I thought I’d look to see the monetary size of these Tracker funds to get an idea of how many shares in Ncyt they would need to buy to achieve the correct weighting.
And guess what? There aren’t any!! Apparently it’s not a thing to have Aim tracker funds as the spread is so great it’s not cost effective.
Oh well, you learn something new every day.
Absolutely manofkent. And if they did wish to move to a full listing their current market cap would see them enter the Ftse 250 at next review.
Acuere,
I would completely endorse your comments.
However, there is nothing that I am aware of to prevent the company from applying for full-list status other than additional costs and management time incurred in meeting the FT Actuaries requirements which are stringent relative to AIM.
This would result in automatic inclusion in to the FT All Share Index and potential inclusion in to the FTSE 350 Index
The London Stock Exchange is seperate from AIM. Whilst AIM is intended for smaller companies with less jurisdiction and different tax rules, just because an Aim company becomes large it doesn’t mean it has to move to the LSE.
Likewise in USA the Dow Jones and the Nasdaq are seperate exchanges.
Okay, there are flaws in this comparison but the one stock I hold that has outperformed Ncyt this year also had a promotion to an Index this year. De Grey mining on the ASX announced on September 4 they were to be included in the ASX 300 when it was reconstituted on September 21. This was anticipated and 2 weeks before the share was 89c. On the 3rd Sept (day before announcements) it was $1.26. By the 21st Sept it was $1.49. During this period it also had a Cap Raise.
It’s not. We need to be on main London stock exchange listing. Just look boohoo/ASOS we are still in aim.
Don't think it's just based on market cap otherwise boohoo would be off AIM by now.
Shaun was asking how you become a constituent of this index and I must admit I was surprised to see that we weren’t already in it. It is a list of the top 100 Aim companies by market cap.
The list is reviewed every quarter. I assume the rules of review are same as the FTSE 100 in that you would need to be in the top 90 to be considered for inclusion. When last reviewed in August for the September change it looks like we only had a mkt cap of about £220m which must have only just fallen short of automatic inclusion.
Our current market cap is about £650m which ranks us as the 15th biggest company on Aim. So you can safely say that come next review for December we will be included.
And what difference will that make? Well any Aim Index tracker funds will have to buy Ncyt shares to make there tracker fund correct. So just another reason for the SP to increase then.