For the fourth month in a row the AIM All Share Index has had a positive month. It is also significant that the AIM Index has out-performed the FTSE 100 every month this year to date. Why could this be? Well, Gervais Williams of Gartmore has one suggestion and if he is right this out-performance by small companies could be with us for years to come.

Despite gloom a about the UK economy the Pound has had a good month and looks like strengthening further in July. Oil has been strong during June which has benefitted a number of AIM listed Oil and Gas companies.

During the month eleven AIM companies saw their share prices double with the best performer being Pinnacle Telecom (PINN) which showed a gain on the month of 144% following a well-received acquisition. On the down side there were the same number, eleven, fallers of 50% or more.

Money Matters

A major factor in the falls on the AIM Market in 2007/2008 was the difficulty in raising funds. In recent months there has been a marked improvement with many companies raising fresh capital. One AIM company that has done especially well is Proximagen (PRX) who raised £50 million in a placing during June with the placing being achieved at no discount to the prevailing share price. Prior to the placing the Company only had a market capitalisation of approximately £30 million. Proximagen is a biopharmaceutical company focused on neurodegenerative diseases.

However, funds are tight and we read of many companies striving to reduce debt. Take fully-listed marketing Group, Creston, for example. Despite seemingly good results, Creston announced in their results this month that it would not be paying a dividend. CEO Don Elgie made this comment: In the year the Group has achieved robust growth in earnings and cash flow. Despite this, the Board believes it needs to take account of the UK economic outlook, shareholders' general sentiment to reduce the company's gearing levels and the continued need to invest in the digital offer. The Board therefore feels it is both prudent and appropriate to reduce the annual dividend for this financial year and recommends no final dividend (2008: 1.80 pence per share), giving a total dividend paid for 2009 of 0.73 pence per share (2008: 2.77 pence per share).

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During the month eleven

AIM companies saw their

share prices double

Chopped Liver Syndrome

And finally we could not resist including an extract from the Chairman’s statement of yet another fully listed company. This time it is Property Investment Company, Panther Securities. Their chairman, Andrew Perloff explains why people are not yet investing in shares:

‘Interest rates on bank deposits are at an all-time low, mostly at less than 1%, investment property and share prices are also at historically low rates, nearly double figure yields are often obtainable from reasonable quality investment property and shares or loan stock can show returns of 4% upwards (standard rate tax paid on ordinary shares) from well-known, long established financially sound quoted companies therefore it seems surprising that the vast majority of people who have cash on deposit have not yet jumped at the opportunity of investing directly into property or the stock market.

For me, it is what I call 'the chopped liver syndrome' - to explain, it will not surprise you involves yet another story from my past.

Many years ago when I was in my early twenties, like most young men, after work or on the weekend I would rush out with my friends to clubs or parties and stay out all hours. I often did not have time to eat proper meals but would eat a quickly made snack or sandwich.

I was particularly partial to chopped liver. Even more so when, after one late night of clubbing, we went to eat at a café in Park Lane, one of my friends had ordered a toasted paté sandwich. Having limited knowledge of culinary matters, I said 'urghh, paté - what's that?'. My friend, knowing my habits, told me 'it's a chopped liver sandwich with a posh name. Try some'. I did and my love of chopped liver increased.

Many were the nights I rushed out, having only partaken of 'chopped liver'.  Of course, I hardly cooked anything myself so it was prepared and left for me by my mother.

Well, one week my parents were on holiday, but had left the fridge well stocked with food, including plenty of my beloved 'chopped liver'. I had sandwiches for two days - wonderful! Three or four days later I was hungry and in a rush, so I gorged myself on a double helping of 'chopped liver' straight from the fridge.

A little later I became violently sick after bouts of high fever and fits of shivering. About two hours later it happened again, then again and again.  Of course I could not go out that night and did not eat the following day, but still the bouts of sickness continued although with less frequency. In between the hot and cold sweats I could only sip some cold water and for the next week or two my thoughts could not help but stray to thoughts of chopped liver and I could be sick again at the mere thought of it. Eventually this stopped, but for some time, any thought of chopped liver brought out a feverish sweat and feeling of nausea. It must have been three years, maybe more, before I could partake of my favourite dish again - chopped liver, liver paté, paté de fois gras, duck or chicken liver parfait etc etc

it seems surprising that the

vast majority of people who

have cash on deposit have

not yet jumped at the

opportunity of investing

directly into property or

the stock market

Come on, Andrew! What's the relevance? Well, if you substitute the words 'investment in shares and property' for 'chopped liver', with minor adjustments to my story you will appreciate I could be referring to the stock market and property investment. Most investors have had a very 'nasty turn' and will have had 'hot and cold' flushes and different degrees of financial sickness and whenever they currently think about buying shares or property, will either lose sleep or come out in a sweat. In due course, time will cure this sickness and logic will take over and a meaningful recovery of value will take place, in stock markets and the property investment market. It should happen more quickly in the stock market and gradually with the property market, with those who have had the least financial sickness from their investments investing first and those most traumatised later.

There are many tempting investment dishes out there available to all who have mentally overcome the nasty but temporary financial sickness. It is still a matter of regaining lost confidence after having had a financial trauma and then many of the investment dishes should give delicious returns in the future.’

If you found Andrew Perloff’s ‘paté piece’ amusing then we would recommend the remainder of his chairman’s statement to you.

Most investors have had

a very 'nasty turn'

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