Giles Hargreave's five share picks to exploit the AIM boom
By Sarah Miloudi | 00:01:00 | 22 April 2010 | Citywire
Interest in the Alternative Investment Market (AIM) has shot up since the turn of the year and Giles Hargreave has highlighted five stocks on the exchange which could be valuable sources of alpha during the next decade.
The AIM market was one of the best performing stock markets in the world last year, returning an impressive 66%. Since the turn of the year there has been a flurry of new AIM listings, raising a combined £253.6 million, well above the amount it raised during the first quarter of 2009. Despite last year’s strong performance, Hargreave, who runs Marlborough’s £175 million Special Situations fund, said there continues to be a number of attractive investment opportunities on AIM. However, he is staying clear of firms which are too focused on the UK, saying the nation’s £169 billion deficit was a major turn off.
‘At the moment we prefer overseas rather than UK earnings – we are not mad about the UK economy for obvious reasons; the deficit is massive,’ Hargreave said.
‘It is impossible to see how the UK consumer is not going to killed. But the good thing about the UK equity market is that it’s not a UK equity market.’
Hargreave, who has worked in the AIM and small firms sector for more than two decades, said the case for AIM and small cap stakes remains the same as ever – a well researched bet can yield larger and faster share price returns than their bigger counterparts.
Hargreave and three of his investment team - Richard Hallett, Sid Lall and Guy Feld - have outlined their top AIM and small caps pick for the years ahead: Alliance Pharmaceuticals
Hargreave said: ‘The company specialises in buying up ‘cast off’ brands from pharmaceutical giants. It then distributes these across the market. I like the idea of a well known consumer drug being taken on. These brands have typically become too small to interest the bigger companies yet still have a good turnover.
Coal of Africa ‘Coal of Africa, formerly GVM Metals, has its primary focus on the acquisition, exploration and development of thermal and metallurgical coal projects in South Africa. It raising capital through the AIM and is listed on the Johannesburg Stock Exchange, allowing additional growth in its coal assets.’
This firm trades in the rapidly expanding vitamin D space and under half of its earnings come from the UK.
This is a pan European satellite company set to provide low-cost broadband services to rural parts of the UK.
A Malaysian based computer data infrastructure provider. It is used by Google to serve its business in China and Japan and was one of four companies that in March raised a total of £203million via AIM offerings.
‘This is a safer way to play the explosion of data on mobile phones, as rather than taking risks associated with a product, the investor is betting on a diversified services firm.’
Over the past three years Hargreave has returned -3.83% through the Marlborough Special Situations fund, outperforming the Hoare Govett Small Cap Extended (-InvTrust) TR, which delivered -10.13% over the same period.