To mark the 25th anniversary of the Alternative Investment Market this week, Telegraph Money has spoken to three committed Aim investors about how they approach the market and reveal their best and worst investments. Read our first interview here
Peter Hopkins has been actively investing in stocks on the Alternative Investment Market (Aim) for the past seven years.
His core investment guidelines are to never invest too much in a single stock, assess the risk/reward payoff of each company and avoid speculative resource exploration companies.
三级成人视频The 44-year-old, from Croydon, said that these investments, made via his broker, AJ Bell Youinvest, have brought in returns of 10pc annually.
He doubled his initial £7,000 stake in Augean, which specialises in industrial waste management, by carefully assessing the potential payoff compared to the risk of owning the company.
“I bought the shares initially at around 25p in August 2017 when they announced they had a taxation dispute with HM Revenue & Customs. The share price had fallen from around 60p. I knew it was still a fundamentally sound business and it had said it was confident of its legal defence.
“I thought this was an asymmetric risk/reward opportunity. It could become a double or triple bagger if it was able to win, settle or delay the dispute, versus the less likely outcome of the company going broke if it lost," he said.
Mr Hopkins was also optimistic about the prospects of the waste management prospects for Augean related to the decommissioning of oil rigs in the North Sea. He sold out when shares were close to 60p in December 2018, bagging £10,500 in gains. However, shares are now worth close to £2 each, meaning that his initial investment would now be worth £56k if he had not sold any shares.
三级成人视频Mr Hopkins learnt to avoid speculative resource exploration companies the hard way.
"Mining and oil exploration companies promise huge gains but actually offer very little in terms of revenue. I have had bad experiences with these types of investments in the past. You see the same names come and go but they rarely turn into sustainable investments," he said.
"I look for companies that are profitable and growing, rather than high risk but high return resource companies.”
His final Aim investing guideline is to always limit position sizes. "No matter how certain you are about a company’s prospects, a profit warning could always be around the corner, which might trigger a 50pc drop in a share price.
三级成人视频“You have to be prepared for losses, but there are huge investment opportunities out there. Professional investors tend to shun Aim and so mispricing is rife compared with the main stock indices. More opportunity comes with more risk, however,” said Mr Hopkins.
His worst investment was in law firm Fairpoint Group, which went bust in 2017. An initial investment of £10,000 fell to just £2,000 by the time trading was suspended.