For Professional Clients only. Not for distribution to or to be relied upon by Retail Clients.
AIM – the London Stock Exchange’s market for smaller, growing companies – marks the 25th anniversary of its launch today (19th June 2020).
During that time, AIM has admitted more than 3,800 companies from across the globe and between them they have raised more than £118 billion of capital.
The Marlborough UK Micro-Cap Growth Fund has a strong track record of identifying attractive opportunities among companies listed on AIM.
Here Co-Manager Guy Feld identifies three AIM companies that he believes have strong growth potential.
The video games sector has, quite rightly, become more popular with investors in recent years, which has been reflected in rising share prices. The direct digital delivery of games and more downloadable content are helping to increase the profitability of these companies and enabling them to scale up their businesses.
This sector is also one of the few that has been a beneficiary of lockdowns, which have served to recruit swathes of first-time gamers, many of whom will likely maintain their new habit.
My colleagues hold Frontier Developments in our stablemate, the Marlborough Special Situations Fund, and we view it as having the brightest long-term future of the AIM-quoted businesses in this sector. The company makes world-class simulation games such as Planet Zoo, Planet Coaster and Jurassic World Evolution and is now also starting to publish games from other developers.
The payments sector has been very interesting for investors in recent years and one company we like here is Boku. It enables users to buy digital goods such as games, music and books, with the cost simply added to their mobile phone bill. This has the advantage of convenience and also means companies can sell to hard-to-reach customers such as those unwilling or unable to use credit cards.
Boku has been another lockdown winner, as people have consumed more digital content indoors. The company has an international footprint, with 20 million active users, and is expected to grow its profits fast. It has an interesting mobile ID verification product, but the greatest potential for Boku is to hook into the rapid growth in Asia of ‘e-wallets’, which enable consumers to make purchases digitally using smartphones and other devices. That could drive financial performance to new levels longer term.
1Spatial has a long history of serving institutions such as Ordnance Survey GB with software to manage mapping data and ensure maximum efficiency and accuracy. The company has emerged from a three-year turnaround programme and its clients include Google and US state governments, as well as businesses in the utilities and transport sectors internationally. The company recently signed a major contract with the State of Michigan.
1Spatial has a strong balance sheet, generates cash, has increasing levels of recurring revenues and, looking ahead, the potential market for its products is substantial.
Guy Feld is an Investment Manager of the Marlborough UK Micro-Cap Growth Fund. These are the Investment Manager’s views at the time of writing (12/06/20) and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. He may or may not hold these stocks in the fund. At the time of writing he owns shares in Boku and 1Spatial in a personal capacity.
Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
Marlborough Fund Managers Ltd is authorised and regulated by the Financial Conduct Authority (reference number 141660)