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Very eloquently put Ports . I comfort myself that I only now hold three stocks on the AIM all of which pay a dividend.. but I've been a sucker for a smooth talking CEO even very recently which cost me. I think we all learn about the AIM at some point... some quicker than others. Anyway confirmation of further depot growth today which is good and two months of the financial year left. Hopefully , trading is in line with expectations and we can look forward to our 1p ddividend later in the year.
Why do most private investors go for the AIM?
The stock market attracts all sorts - gamblers as well as investors - and the gamblers inevitably orientate towards the 'sportier' end of AIM. Indeed, although I consider myself a fairly sensible chap, I'd be a hypocrite if I pretended that I didn't have a bit of both inside of me. To underline the point, who remembers the months following the vaccine introduction and ramp up of QE (Nov 2020 - Sept 2021). In my ISA, I was making good money and very quickly on every damn share - many on AIM - it was like shooting fish in a barrel. No records to keep, no tax to pay, banking 50% - 100% profits in double-quick time, I remember saying to a much more experienced friend "is this actually legal?" It was intoxicating. Of course, I know better now!
The other thing - at least for me - was that a couple of years ago when everything rising it was easy to buy into the prevailing narrative (now probably disproved) that the AIM was increasing in quality and also that small caps outperformed large caps over the long term.
The last 15 months has been an eye-opening journey. By no means am I wiped out - I'm very diversified - but I've had a few investment howlers and seen lots of other dreadful stuff. I've seen insider dealing, creative accountancy, misleading communications, fraud (dare I say corporate espionage!), and any number of savage unexplained daily drops.
Btw, those poor iEnergiser holders have seen the value of their shares fall another 50% this morning. Last Thursday that was a company of £200m market cap and doing v well - growing revenues, profits, cash generation and dividends - today shareholders are essentially wiped out.
Well this is all very interesting. It’s amazing how I read on various chat boards how so many private investors moan about the AIM but yet continue to invest in it thinking the next time they’ll get it right.
Like most things there are the strong and the weak. The strong companies who are profitable, pay dividends, have deep pockets, financially sound, comprehensive resources, marketshare etc primarily on the FTSE100/250 and then we have the weak on the AIM.. start ups, in dept, in need of funding, promising future riches in the pot at the end of the rainbow in mining, pharma, tech or whatever. The weak striving to take market share from the strong. The strong though are in the box seat.. they always have been, always will be. They have the resources to keep the weak in their place and if there is by some small chance an AIM company that has something the strong want they have the power to take them over to protect their strength and that’s what we all hope for. Even with DX.
What’s been the best performing share index in the last one, three, five years …. The FTSE 100 and the worse.. the AIM
Since inception the FTSE 100 is up 600% +
The FTSE 250 up 300%
Aim All Share -16% in over 20 years
So why do most private investors go the AIM, well, its a cheap way to get into share dealing but the odds are stacked against it… of course there is the odd nugget… and exceptions but not many and often when we think we have found one … it turns out we haven’t.
In light of all the recent comments and bearing in mind that 3 years down the line I'm sitting on a 10% loss on an investment of 23k, I'm scratching my noggin wondering what on earth I'm still doing on the AIM !
That's it - I'm "hoping for the best..."
But it's not all doom and gloom. The silver lining in my cloud is the dividend I received of £379 with further allocations due in the months to come.
I wanted to see if could sell my stake yesterday and today, but wasn't able to.
Presumably because there were no takers?
That speaks 'volumes' to me about investor reticence in DX.
So where now?!
Well, I'll be keeping a very close eye on the big boys, the sound advice from contributors here as well as my fingers and toes tightly crossed.
GLA and still onwards. : )
Yup, the only and VERY ONLY rule YOU CAN TRUST on aim, is to avoid aim altogether... all the rest is rubbish, conning and frauding the small investor
I've not entirely escaped porstwigger. Just returned to my laptop to find that another AIM stock - and this one I do hold - has just dropped 23% completely out of the blue and for no apparent reason (yet). I've immediately sold out, crystalising a 5% profit on what was a 30% profit an hour ago. Absolutely crazy. Ridiculous! I just can't take the risk.
I had high hopes for Essensys plc... No idea what's going on.
You are so right about the platitudes on AIM... and those are good & sensible rules. The way I'm feeling today, I might have myself another rule: avoid AIM altogether.
Well I'm pleased you weren't a victim.!
There are far to many meaningless platitudes on the AIM in my view;
Look for a founder/board who has skin in the game
Look for director buying
Buy on the rumour.. sell on the news blah blah blah.
Directors act in best interests of shareholders
It's true in some cases but certainly not all and it all depends on the context.
I've had a bumby ride over the years but developed a few personal investment rules the most important being:
Never invest in a company that is not paying a dividend or at least making money
Avoid companies in debt
If there is no single insitututional share holding above 3-5% - Why Not
Never invest in companies that talk to much.
In saying that I broke the rules with DX as it was a turnaround gamble and I was impressed with the staregy of the previous board. It remains to be seen if I was right.
Thanks portswigger, appreciate your reply. I should say, I'm not invested there, but I noticed the big drop this morning and went to investigate. For me it's a case study as I learn some 'home truths' about AIM.
"It's the AIM... hope for the best and prepare for the worst." I love that!
I'm busy looking through my other AIM stocks to see if 'insiders' own the vast majority of shares (> the magical 75%, as in iEnergiser's case). Hithertoo, I'd thought a large founder holding was a good thing.
I sympathise... but perfectly legal... perils of the AIM I'm afraid. This company has no insitutional shareholding of any note so private investors are wide open. All is not lost yet though.The AIM has the highest risk and this is what can happen.The AIM is a unbelievably horrible and dangerous place. I'm not saying it's true in your case but many PI's put their faith in PLC directors as people of assumed integrity and all that. The harsh lesson is that many are not and will do what suits them.
It's the AIM... hope for the best and prepare for the worst.
Those poor blighters who own iEnergiser shares are now down 80% this morning.
I have massive sympathy for them.
A few moths ago there was talk of DX delisting when we were suspended...
To what extent is there a read-across to other AIM stocks?
I am shocked.
Thanks again.
This post is off-message re DX., but you lot are a knowledgeable and helpful bunch so I'm going to put it out there.
Today the board of iEnergiser Limited announced to the market a proposal to cancel all shares & delist from AIM. As far as I can tell, they gave no prior notice that this would happen. If the proposal goes through (requires 75% vote), minority shareholders will be left with few rights and shares that are hard to trade other than through some "matched bargain facility".
This is an AIM stock. I own plenty of other AIM stocks, perhaps you gents have too, which is why I'm posting.
Imagine waking up to find the value of your holding instantly worth two thirds less, which is what's happened to minority shareholders of iEnergiser this morning.
Is this legal? Can they do this without buying out or compensating minority holders at something like market values? I've heard of other AIM stocks delisting and I can see there may be valid reasons why (costs and future funding are often cited as reasons), but is this what normally happens? (private investors left high and dry).
This is an eye-opening case for me.
Any thoughts gratefully received.
Yes you are right the buy back hasn't started yet. DX though have made the point very clear that they are concerned about the number of shares in issue and outlined the possibility of a share buy back at some point. I tend to agree with Ports that that will come more into the thinking in 2024 especially if the SP continues to pretty much stagnate up to the mid thirties.
I wouldn't worry to much about buying at 32p. Both Lombard and Shroeders bought in above 30p I think and they seem to be quite content at the moment. Mind you they have over 3% of the company so the dividend must be attractive to them to date.
"I ask myself if the dividend and projected dividend/buy back is worth it and the wait or can I (be) tempted elsewhere.?"
That's exactly my thinking Sister. And I think I'm right in saying that the buyback hasn't started and there's no guarantee it will. I also worry those wafer thin margins could get eroded/competed away, although they've done well so far, all things considered.
Timing is everything (or a lot) and the price paid does colour one's view. I never got in anywhere near 9p I'm afraid. I bought in at 32p and topped up at 21p, none sold. I have considered banking the profit on that top-up, but have resisted so far.
The share price has increased from around 9p this time 2020 to 28p now. That's a very good return for an AIM company in a low margin business. Unless you were in prior to 2015 you've done very well.. It's a slow process now... substantial economic headwinds and a relatively time consuming organic growth. We are where we were at suspension but DX is a stronger company with a new board and capital allocation strategy ... got to give it time !
We can't expect massive growth in such a competive market with margins of 5% to 7%.I think this is a 3 to 5 year play from here. I ask myself if the dividend and projected dividend/buy back is worth it and the wait or can I tempted elsewhere.?
Thanks Frogjumper, yes he did say that.
Yes it's a tough market and in that context I'd also prefer to be floating in the doldrums than sinking in a storm, but all the same I'd rather be sailing the high seas into the deep blue yonder...
We shouldn't be so accepting that effectively no news is good news. I think we should be more ambitious of DX.
I don't know.... they say investing is the transfer of wealth from the impatient to the patient, but I've held this share for a long time with nothing to show for it.
Yes..DX stated in the capital allocation policy review that they would consider a dividend and share buy back policy as appropriate. As long as the business continues to generate free cash as they have done so far. It's a bit of a balancing act between funding growth plans and satisfying shareholders.
Unhooked: The restoration of the dividend was flagged yonks ago and, as Ports has said, there's been no news since that would cause a change in the share price. Wouldn't you rather be in the doldrums than sinking in a storm?
Cheers portswigger. I thought the Interims were pretty good in current conditions, but neither that nor the introduction of a divi boosted the share price at all. Take yr point that the company's not particularly undervalued and that that 'steady as she goes' is therefore not a bad outcome. I suppose the obvious way for it to become undervalued is by achieving expectation-beating results, but that won't be easy in the coming year or two.
Buybacks? Hadn't thought of that. In my experience very few UK small caps undertake them - is DX. generating enough cash I wonder?
New and untested management. I guess that's not helping either.
Hmm, the reasons for the doldrums are stacking up!
Thanks again.
I think its much simpler than that Unhooked. The market makers have to make a market and they are making a market around 29p. The only way the SP will increase is if demand to buy is stimulated by results or news. Nothing is stimulating it... you've only got to look at the daily trading volume. So why will it increase ? Good figures don't stimulate demand unless it hasn't been signposted. I think it was FJ who said it we will only see big movement if there is an offer or in my view a share buy back which I think may come in 2024. Personally, I don't think the Tuffnells claim has much effect but it will depend how it pans out and news surrounding it. The ii's will be pretty happy at the dividend policy. So unless we get some news to stimulate demand to buy or sell I think we will languish 10-20% or so of where we are.. Maybe something will happen.. who knows but steady as she goes is not that bad but a pretty boring watch. The market cap is pretty healthy even with the share options and the yield so it's hardly screaming undervalued. !
Gents, does anyone have an opinion as to why we've been stuck in the range 28-32p for so long?
Is it the Tuffnells claim? Is that proceeding to court? I had the impression that the consensus was that the so-called 'corporate espionage' matter was a bit of nothing.
The Interim Results of 27th February read well to me, as did the restoration of a dividend.
So why are things so static? Could it be worries about where the economy may be going?
Mrgamble: I wonder if that's across the board or whether they're targetting price rises on unprofitable business?
DX have yet again raised prices to customers by 9%, Tuffnells are now 50% cheaper to use for the same consignments, a few companies i know are now heading back to tuffnells on the back of this. I get things are tight but their prices are so high now its ridiculous.
Yes, I would agree the landscape has changed with the appointment of the new BOD so there are many unknowns and let's hope the new board no longer have the propensity to incur extortionate legal fees with the ongoing Tuffnels claim. I do think that is keeping a lid on the share price but not by any great amount. They really need to deal with that.
I'm not to fussed what Lloyd does. He'll make a healthy profit whenever he sells and I don't envisage any great reduction in SP value. I don't think he will drip,maybe he'll sell to a ii, there should be more interest now they are paying a dividend and the positive outlook continues.
I'd agree with that FJ. I really don't see substantial growth in our investment without the possibility of merger/sale or a reasonably substantial share buy back policy. If I didn't have a reasonable dividend I'm not sure I would stick it out. I think Lloyd and Ron were probably looking at a sale in the not to distant future but I think the new board are a bit longer term and I don't yet get a clear picture of an exit strategy. Notwithstanding the outstanding options I'llbe keeping an eye on the major and institutional shareholders so see if there are any clues moving forward.
ports – yeah, still around, still a holder. Just away a lot these days. Mind you, at the moment, following DX is like watching paint dry, but this could change all of a sudden for good or ill, without warning, as it is wont to do, especially on AIM. For example, it would be interesting to see what Lloyd does next, i.e. his strategy for extracting the maximum from his considerable investment in DX. He can’t sell them all in one go, clearly - the only way he could do that would be through a takeover, which would no doubt suit him - to say nothing of others - especially if paper-for-paper. In the meantime, even if he doesn’t need to, he may want to liquidate at least part of his holding. The problem is, any material sale by him will hit the SP, at least in the short term, and hence hit the value of the balance of his holding by possibly even more than the amount realised! Moreover, it would be unfortunate for the current directors - but not for PIs - if he did this just when the SP was about to be tested for share scheme purposes…