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The winning AIM stocks in Hargreave Hale's VCTs
by Sarah Miloudi on Mar 19, 2013 at 14:44
AIM venture capital trusts (VCTs) have endured a difficult run of late, as they struggled to accommodate the wave of money that entered the sector in 2006 and more recently the threat of a retail ban under Ucis rules.
However Giles Hargreave, chief executive officer of Hargreave Hale, and Oliver Bedford, part of the firm's AIM VCT 1 and AIM VCT 2 management team, argue there are standout companies invested in by VCTs, making the sector worth backing.
Hargreave said Advanced Computer Software has 'quite a lot further to go' despite rising to around 90p after an 17p float, while the VCT backed Abcam's float at around 33p and it is now worth more than £4.
Of Abcam, Bedford said: 'It has a fantastic management team, all the growth is organic, it's very cash generative and has a strong balance sheet.'
AIM VCT investing is not without its risks, as the duo found out with a company called Angel Biotechnology, which entered administration at the end of February.
'When we invested there was pipeline and an order book, then there were some challenges with the pipeline and order book that we hadn't expected,' Bedford explained.
He added: 'The money which we put into the company, which we understood was to finance working capital and growth, [but] the growth wasn't there. A company which we understood to be profitable turned out to be substantially loss making.'
Hargreave said that while surprises like Angel Biotechnology are a disappointment, as with any smaller company and AIM investment, the winning stocks cancel these out.
At the beginning of March, the ordinary shares net asset value (NAV) of AIM VCT 1 was 65.15p and its share price was 61.5p. Shares in AIM VCT 2 had an NAV of 96.5p and were priced at 91.2p.
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