Over three decades ago an academic paper revealed a simple yet highly effective way to improve investors' odds of stockmarket success: avoid the big names and instead identify tomorrow's giants.
The study, carried out by Rolf Banz in 1981 at the University of Chicago, first documented what is known today as the 'small firm effect' or 'small-cap premium', whereby over the long term smaller-sized shares deliver much higher returns than their larger rivals.
Banz's study looked at the US stockmarket, but other studies over the years have drawn the same conclusions for other markets, including the UK. Research carried out in 2015 by the London Business School, for example, found that over 10-year periods since 1955, smaller firms outperformed larger companies... more
Do bumper interims from this AIM-listed financial planner/wealth manager AFH Financial Group (AFHP) consolidating smaller advisory firms, imply further upside?
Or trading on 32 times earnings for its year to end-October 2017, with market price at 345p, is its stock rating now high-risk?
After listing four years ago, the price traded sideways at around 150p, then doubled in 2017 and hit 360p earlier this year. It dipped back near 300p but has strengthened again on latest results.
A dividend yield barely over 1% makes plain,"support" is all about growth numbers and narrative: optimists will see plenty more scope for a £130 million group to rationalise a fragmented industry of owner-managed firms, while pessimists be wary the growth rate will eventually ease or a... more
In the three years since Auto Trader (AUTO) joined the stockmarket in a £2.35 billion IPO, investors have grown used to a stop-start journey in which share price peaks have been followed by sharp descents.
Today, the shares were in the fast lane after the online vehicle marketplace impressed analysts with its annual results and soothed worries that market forecasts for the year ahead may have become too optimistic.
The key metric of average revenue per retailer (ARPR) forecourt was a particular focus after rising by £149 to £1,695 in the year to March 31. This figure was driven by broad growth across stock, price and product.
But with fewer cars for sale in the market, Auto Trader is forecasting a small decline in stock in 2019 that will cause ARPR growth to be... more
With the short-sellers seemingly in retreat, shares in facilities manager Mitie (MTO) have taken another step forward today after well-received annual results highlighted progress in the company's rebuilding job.
Chief executive Phil Bentley, the former British Gas boss, said that after one year of the company's transformation programme Mitie was "where we need to be".
This upbeat mood is in marked contrast to the state of uncertainty facing shares in Mitie and the rest of the outsourcing sector following the collapse of Carillion at the start of this year.
With shares close to 150p, Mitie was looking vulnerable after a spate of profit warnings in preceding months had made it one of London's most shorted stocks with around 15% of equity out on loan at one... more
When the UK equity market lost about 10% between January and February a few clients phoned our financial advisers to ask "should we sell up and move to cash?"
A few weeks later the conversation switched and people were guessing how long until the FTSE (UKX) hits 8,000 points. Now, it's changed again. Markets are falling and high profile investor George Soros has warned that global politics are threatening to generate "another major financial crisis." Is he right? Nobody knows.
I'll let you into a secret: no financial adviser, no pundit, and no fund manager for that matter, can predict the short-term direction of the market. Few still even make that claim. That's not what investing is about.
A panic move to the supposed shelter of cash may be... more
Four very different small caps - Oxford BioMedica (OXB), Alpha Financial (AFM), Tricorn (TCN), and MS International (MSI) - repaid the faith of investors today with some spectacular share price gains.
Aside from their double-digit percentage rises, the quartet have some interesting stories to tell, not least the announcement by Oxford BioMedica concerning the development of its gene therapy treatment for Parkinson's.
Its licensing agreement with Axovant Sciences, a clinical-stage biopharma company, will accelerate the development of OXB-102 in an effort to address a disease which has a high unmet medical need.
Oxford BioMedica will receive a total of $842.5 million dependent on development, regulatory and sales milestones, with 7% to 10% tiered royalties on net sales of... more
A week after being named the UK's worst high street retailer, WH Smith (SMWH) fired the perfect riposte today with a reminder that it knows a thing or two about success in retail.
Its latest trading update was a trademark WH Smith performance, with a continuation of the profitable growth and strong cash generation that has won it so many fans in the City, if not the love of all high street shoppers.
Shares jumped another 7% on the back of the update, leaving the FTSE 250 Index (MCX) stock within sight of the record high seen at the turn of the year.
The stand-out performer was again the travel division, with growth in passenger numbers at transport hubs helping to offset the slowdown in consumer spending on the high street.
WH Smith's unique positioning at airports,... more
Our regular income portfolio of investment trusts has posted total returns of 9% since inception last April, despite a 'hairy start to the year' which has seen nine holdings in negative territory since our last update. James Brumwell, who is managing the portfolio, has been tinkering to take advantage of capital gains allowances before the end of the tax year.
A common tactic used by professional investors is to 'bed and breakfast' investments. This refers to the sale of a particular holding that is then bought back almost immediately; it can work well for investments which have performed strongly. This strategy means it's possible to crystallise gains without paying tax on them.Bed and breakfasting
For example, if you had an investment which grew 10% from... more
As AIM success stories go, they don't come much more random than Filta (FLTA) and its rapidly-expanding business helping restaurant kitchens to deal with the used cooking oil in their deep fat fryers.
Having launched in 1996 and then listed on the London stock market in November 2016, the company is now racking up annual revenues of £13.5 million and profits of £1.7 million from its franchise-based model.
Filta's cooking oil filtration and fryer management services are taken by 6,000 sites every week, with a regular visit from a FiltaFry operator said to double the life of cooking oil.
The company thinks it has now recycled over 250 million litres of oil, meaning cleaner, safer kitchens, less downtime for staff and better quality oil for... more
Whatever your view of the government's controversial, loss-making sale of shares in Royal Bank of Scotland (RBS), there's no doubting that the move is a hugely significant moment for followers of the UK banking sector.
Like its former taxpayer-owned cousin Lloyds Banking Group (LLOY), RBS shares have continued to be met with scepticism in the City, despite the pair's undoubted turnaround progress and improving dividend prospects.
The majority of brokers remain neutral on RBS, which probably comes as no great surprise given that 62% is still in the hands of the Treasury even after a share placing at a price of 271p each.
But there are notable pockets of support, including from leading fund manager Neil Woodford after he started investing in RBS in 2017.