AIM has not had the best start to 2008. Only six weeks into the new year and three of its stars - Leadcom Integrated Solutions, Mecom and Silence Therapeutics, all of which were feted at AIM’s annual awards in October - have run into difficulties.
Hat Pin, though unheralded last year, has now joined the casualty list. Two weeks after giving warning on profits, the AIM-listed recruitment company has admitted the discovery of accounting irregularities and asked for its shares to be suspended.
For the London Stock Exchange, which runs AIM, this is a setback it could do without. Last year’s demise of Torex Retail and BetonSports prompted criticism of the Nomad system - since tightened - under which AIM companies are regulated, and Hat Pin’s troubles are likely to draw fresh brickbats.
Over the last two years, 62 AIM companies have become worthless - more than at any time in AIM’s history - and with the credit crunch starting to bite, that run-rate is only likely to increase. Raising additional funds from equity investors is becoming more difficult, while if bank financing for smaller companies is available at all, it is being offered at punitive rates and under ever-tougher lending covenants.
But perhaps AIM’s greatest obstacle is that, taken as a whole, it has not been effective in creating value for shareholders. Analysis by the London Business School last month found that over the last decade, AIM stocks have provided a nominal annual return of 0.3 per cent. That contrasts with the annual 9.1 per cent return given by the smallest 10 per cent of the Official List by market capitalisation - perhaps the closest comparator.
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Hat Pin’s woes will only provide a further drag on that underperformance.