Are investors turning sour on AIM? The alternative market suffered a difficult end to 2018 with the latest figures showing fourth-quarter fundraising fell below the historic average.
Certainly the backers of the UK’s growth stocks could be forgiven for being more than a little jaded after a series of high-profile collapses and performance warnings.
Fresh in the memory are the travails of MySQUAR and Patisserie Valerie parent Patisserie Holdings PLC (LON:CAKE), which have undoubtedly rocked confidence.
And while not wanting to lump the success story that is ASOS plc (LON:ASC) with these two failures, the online fashion chain’s earnings alarm in December sent a few of its backers scurrying for the door.
The figures revealed a hair-shirt run up to Christmas with total funds raised by AIM companies totalling £1.05bn, below the two year quarterly average of £1.64bn and massively down on 2017’s fourth quarter total of £2.74bn.
Total funds raised for the whole of 2018 were also down 17% year-on-year at £5.96bn from £7.13bn, although it was still the second-best year for the market since 2010.
AIM also suffered a net loss of companies, falling to 923 constituents from 960 as 59 new joiners were offset by 96 departures.
All of this could point to a weakening of confidence in AIM by investors and companies.
However, the suffering of the junior stocks could also be a case of small caps being hit as a knock-on effect of the wider market turning downwards in the face of a global slowdown.
There is certainly enough to reason this, with trade wars and the ever-looming background of Brexit applying the brakes to the global economy.
The small caps could just be the proverbial coal-mine canary.
One canary chirping happily this week however was recruitment software firm Dillistone Group PLC (LON:DSG) as it surged 44% to 61p after snapping up the most lucrative contract in the company’s history, although technically it was a three-year renewal rather than a new deal.
Recruitment consultancy Nakama Group plc (LON:NAK) saw less luck as its shares plunged 21% to 1p following a profit warning.
Weaker-than-expected trading in Asia had pushed the company into a loss for its third quarter while also wiping out the £186,000 profit from its first half.
Meanwhile, antennae maker Filtronic PLC (LON:FTC) was seeing a positive start to 2019, with its shares rising 4% over the week to 6.4p, after a rough 2018 that saw its share price collapse from a high of 29p in September to 5.8p at the end of the year.
This week’s rise was down to an agreement signed with Quintel USA to distribute Filtronic’s products to a number of North American mobile network operators.
The AIM All-Share itself was down 0.2% in the week at 912 points, while the FTSE 100 was down 2% at 6,831 points.
Midatech Pharma Plc (LON:MTPH) essentially had its value cut in half over the week, plunging 53% to 2.6p after the drug developer revealed a “very limited” cash position.
The threadbare bank balance also spells trouble for Midatech’s MTD201 Q-Octreotide, a drug currently in development aimed at treating rare and debilitating tumour types.
Education software firm Tribal Group plc (LON:TRB) circled the wagons to defend itself against a legal claim for royalty payments that could potentially cost £30mln, sending shares sliding 6% to 70p.
The claiming party, a software platform provider, said in a letter that Tribal had failed to account properly for royalties under the terms of a value added reseller agreement from April 2000, and as such had breached the terms of that agreement.
Meanwhile, investment firm Frontier IP Group Plc (LON:FIPP) also sparkled in the week as its shares moved up 2.5% to 84p on the back of a £403,000 grant awarded to its portfolio company by the Department of Health.
The Vaccine Group, which Frontier owns 19.2% of, is part of an Anglo-Chinese project looking to combat a potentially fatal disease, Streptococcus suis (S.suis), that is able to jump from pigs to humans.
The initiative is aiming to develop a single-use vaccine that can be used to inoculate pigs against the illness.