AIM highs and lows of 2018 - and a checklist for avoiding disasters

Sixteen companies were forced off the Alternative Investment Market last year because of financial stress or insolvency. That was up from nine companies that suffered the same fate in 2017. When you add them to those that hit problems but somehow managed to cling on (albeit with broken reputations and battered share prices), it’s a reminder of just how perilous the AIM market can be. So how can you try to avoid these kinds of problems?

AIM is popular with investors looking for the kind of explosive growth that happens when smaller, less well known companies come good. A lack of decent research means there can be hidden gems in AIM’s wild expanse of just over 920 mostly small-cap stocks. It’s a market that captures the essence of Jim Slater’s famous observation, that “elephants don’t gallop”. His message being that big companies don’t grow anywhere near as fast as small-caps, and neither do their share prices.

To be fair, there have been some great examples of that kind of growth in recent years. With investors risk-on and funds flowing into speculative plays, some names have seen big re-ratings. They’ve included companies like Burford Capital, Fevertree Drinks,