Boring future for AIM26 Feb 2016 12:56
Boring future for AIM?
Friday, 26 February 2016
Amongst the bag of shares we monitor daily, there are several AIM shares which are resolutely refusing to perform. Obviously, while we eschew "fundamentals", it doesn't stop us ruminating on what the heck is going on with them as a suspicion is slowly developing to explain why the AIM market is restricting movements.
Essentially, we have good cause to regard the AIM as a casino market and very little of the performance of many components since launch dispels the "scent d'rodent".
Our theory is simple. Perhaps the AIM intends to go straight and, as a result, it must restrain the ambition of companies with "X" trillion shares in issue to see their share price soar again from under a penny, back to the dizzying heights when it was once 8p, to 400p.
In other words, we suspect a campaign is underway to ensure a company's share price reflects what the company is actually worth, rather than the ambitions of some bloke in a discussion forum.
Quite a few household name shares fall into this category where, once they've moved from the "going down" zone, they simply refuse to move into the "going up" zone, but instead effectively flatline.
Recently, we've seen LSE:LMI:LonMin's growth to 95p and were chuffed at successfully mapping a rise from 60p. But, in the grand scheme of things, anyone who's effectively trapped at the share's 400-quid highs in 2007 is stuffed.
The company is going to need to discover a goose with special egg capabilities in a gold mine to get the share price back. Even the adjusted high (the company did a share split last December) of 200 quid in 2011 appears unattainable.
The result of this (perhaps dodgy) theory is, should the AIM prove to be ensuring companies are valued at what they are actually worth, we face a pretty boring future against many shares (LSE:RRL:Range Resources, LSE:BMR:BMR Mining, LSE:XEL:Xcite Energy, LSE:RKH:Rockhopper, LSE:BOR:Borders & Southern Petroleum, LSE:RED:redT Energy, LSE:BPC:Bahamas Petroleum Company, LSE:ZOL:Zoltav Resources, to name some just from memory).
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.