14-15-Liquidity.qxp 22/4/09 17:01 Page 11
companies saw at least ten per cent of their on the natural resources sector – are all Its shares were one of the most volatile on
shares traded and 869 companies, or 54 per heavily traded, though they differ quite widely AIM, subject, it seems, of much retail day
cent of AIM, saw less than ten per cent of in size: from Jubilee Platinum, Braemore trading, with the share price oscillating
their shares traded. Some 252 companies had Resources and Hambledon Mining, which all ferociously throughout the period.
less than one per cent of their shares traded. ended the period with a market cap below £20 The research goes some way to
million, to £727 million Sibir Energy and proving that liquid companies are
THE ROLE OF MARKET-MAKERS £435 million Peter Hambro Mining. generally larger, have more market-makers
AIM’s lack of liquidity is caused, in part, and exhibit greater adherence to the
by the habitually poor price spreads offered, PRE-EMINENT AIM STOCKS Higgs Review’s recommendation on
especially on penny shares. Most AIM The most traded stock (see table 1) within corporate governance.
stocks are traded on a quote-driven system our select population was Titan Europe, a It goes to show that best practice in
of competing market-makers and, while maker of wheels for agricultural and mining business pays off in every way. ■
there is some degree of cause and effect at vehicles. A possible takeover by its former
play in the employment of market-makers, parent company collapsed in September, This document is an extract from a
a competitive market implies that the more leading to plenty of trading as investors comprehensive new research document
you have, the better the spread and the sought an exit. Liquidity Drivers on AIM. To order your copy,
email calvin.green@vitessemedia.co.uk
“Companies failing to separate the role of chairman
and chief executive were found to be ‘less liquid”
more liquidity can be squeezed out. In this flurry of market interest, its share
BDO Stoy Hayward is the award-winning UK member firm
The report found that the strongest capital effectively changed hands almost three
of BDO International, the world’s fifth-largest accountancy
correlation was between trading volume and times over – as 265 per cent of its share capital network with more than 600 offices in over 100 countries.
the number of market-makers supporting a was traded – during the period, with its shares
company. Our select band of 106 stocks has, falling by 80 per cent.The second most active
on average, six market-makers, compared with stock is Tanfield, the maker of electric vehicles
AIM’s overall average of less than four. This and aerial work platforms, which has, in its
selection (see table 4) has four stocks 371 million shares, more than nine times the
employing 11 market-makers and another number of shares than Titan. It witnessed over
Growth Company Investor is widely recognised as the
UK’s leading magazine on fast-growing companies.
seven stocks with ten. 29,000 bargains and its share capital was
Our research is available daily at
This group – the bulk of which are focused traded more than twice over – 233 per cent. www.growthcompany.co.uk
3 FASTEST-GROWING PROFITS 4 MOST NUMBER OF MARKET-MAKERS
‘Pre-eminent’ Profit Annual Shares Value of Value of
‘Pre-eminent’ Market- Shares Number Value of Value of
company before tax change in traded shares shares traded as
company makers traded of trades shares shares traded as
(£m) PBT (%) (%) traded (£m) % of mkt cap
(%) traded (£m) % of mkt cap
Fabian Romania 7.06 508 52 11.528 25.1 Cambrian Mining 11 112 22,154 130.085 559.0
Dolphin Capital Investors 632.74 464 65 224.706 95.2 Sibir Energy 11 59 69,547 563.011 77.5
Tanzanite One 6.20 256 77 18.939 112.3 Peter Hambro Mining 11 126 72,567 511.745 117.7
Sibir Energy 237.13 207 59 563.011 77.5 RAB Capital 11 62 9,619 63.255 131.0
Tanfield Group 11.55 203 233 60.878 247.1 Caledon Resources 10 100 10,068 86.313 198.7
Lancashire 270.41 146 147 961.663 115.1 Braemore Resources 10 74 9,826 19.768 111.3
Healthcare Locums 7.32 138 99 115.705 77.1 Jubilee Platinum 10 55 3,378 10.807 105.3
ASOS 7.31 117 113 238.460 118.3 Hambledon Mining 10 54 3,954 10.559 62.1
Cape 33.00 112 94 131.336 335.9 ASOS 10 113 30,968 238.460 118.3
GNE Group 1.03 94 145 36.637 175.6 Majestic Wine 10 57 7,028 53.353 61.9
Mergers & Acquisitions 15
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