Amati 2019/20 Offer

[BusyBumbleBee]

Amati have announced a new offer for subscription see https://uk.advfn.com/stock-market/londo ... n/80614484

Highlights

~~ Prospectus to come later - end October
~~ £25 million plus £20 million over allotment to be raised over next 12 months
~~ No more than £15 million to be raised before calendar year end
~~ Further £5 million from their DRIS

Amati only invest in AIM (occasionally "near Aim" i.e. companies that should list soon) . So the companies could be more mature than unlisted

The over allotment facility will only be utilised if the Directors are satisfied that there is a suitable pipeline of investments to deploy the extra funds and if there is sufficient demand from investors.

So it all depends on your view of AIM and Amati's stock picking skills whether you invest or not. But it is worth pointing out that that they target 5% of NAV per year as a dividend and they manage the spread and discount very well so you can easily sell your shares later if you need to. Also there is never a rush to take up the offer but they usually get pretty close to their target each year.

I would consider this one if I was going to invest in VCTs but I am saving my powder until we see some very distressed offerings in the secondhand market

[barchid]

BBB
Your post is very accurate, as always !
Amati are certainly a very user friendly company but I have noticed, and am not sure if it is change of managers, new rules or a cobination of both, that since Doug Lawson departed to his own start up their performance has been less than it was. Of course I know AIM has been a tricky market but they have been caughr by Accesso, down from +/- £30 to £8 today, Keywords have halved, etc etc. Some of the companies they have invested in look like punts to me, i-nexus, when the lady who replaced Doug Lawson stood up (2018 AGM video still on their website) to explain their recent investments she said this was difficult to explain what they did (Buffet says never invest in a company that a fool could not run as one day a fool will) the only thing one needs to know is they paid 79p in June 2018 and in Oct 2019 they are 28p mid price. Loop up a similar story, paid 260p in Jul 2017 currently 64p mid price today.
Clearly one must expect lemons to arrive as well as plums but the Dr Jourdan/Doug Lawson combo with David Stevenson as backstop performed over the last 5 years or so rather impressively. Have they lost their mojo or am I being a tad harsh ?

[BusyBumbleBee]

Have they lost their mojo or am I being a tad harsh ?

Both I suspect Barchid. The vast majority of their current investments were made by the old team. I think the primary cause is that AIM has lost its Mojo .

[barchid]

BBB
Your point about AIM perhaps losing its mojo is well made, one wonders how much the Woodford Barnett shenanigins may have contributed to this.
It was about 5 years ago Woodford started up his funds, with an almost immediate rush of cash which needed investing. Sadly he spent iit n a large way for small co's often aim, or start ups.
I see his earliest investment, apparently, was in Sphere Medical into which he ploughed significant extra funds over his holding period, has now gone belly up, we can only suspect how much his( & Barnetts) activities have distorted this market.
Bearing in mind when markets turn that the pendulum normally swings too far in one way or the other we may see AIM without its mojo for some time yet, perhaps the Amati offer, and other AIM vct's may be best ignored this year?
I know you are somewhat bearish on vct's anyway under the new rules, it does appear that vct holders could be living through "interesting times".

[scotia]

BBB
Your point about AIM perhaps losing its mojo is well made, one wonders how much the Woodford Barnett shenanigins may have contributed to this.

That's an interesting observation - I hadn't thought about it. Some commentators thought that the steep rise in AIM shares (before their fall) was due to their inclusion in Inheritance Tax avoidance schemes. Maybe that has also peaked. I had a look at return over 5 years, and Amati VCT seems still to be ahead of most other popular VCTs, but their price has been substantially more volatile, and buying them at the wrong time (e.g October 2018) has proved painful - in that case the NAV has dropped from 186.26 to 146.97 (plus 7.5 Divs). Has the drop in AIM share stabilised? I wish I knew.

[UncleEbenezer]

I would agree, fashions come and go, and AIM was surely fuelled by (financial advisors promoting) IHT. Evidently that rise overshot. Though Amati's rise which you refer to followed quite a few years of underperforming the other AIM VCTs.

Woodford may be more effect than cause of the drop, with the effect exaggerated by having gone in with lots of fanfare somewhere around the top. AIM's former rise might or might not have been sustainable other things being equal, but is now very likely an early casualty of brexit. I expect there may be a sentiment bounce in the not-too-distant, but that'll be far too short-term to benefit a VCT investment.

[barchid]

Uncle
I take your point entirely, but I fancy Woodford could be both a late cause & most certainly an effect.
I recall the number of start up (or close to) companies which could have been EIS had Woodford offered that wrapper to his followers, that he hoovered up, which likely would have floated on AIM in due course which with each IPO would have taken cash out of the AIM pot but did not did not arrive, thus helping the spike we saw up until October last year. That is a perfectly feasible proposition and I do suspect his infusion into "patient capital" etc over the past few years has had a deliterious effect on AIM values this year.
The timing fits perfectly, last year he was ferreting around finding quotes in Guensey for his unquoteds, showing the buying splurge he'd been on was finished, it could of course just be coincidence....?

[barchid]

Amati half year report out this afternoon, divi of 3.5% and announce the 19/20 offer prospectus will be end October. Figures look perfectly respectable for the period to 31 July, however the NAV has dropped some way since the half year end, so given a lower NAV and that the £25mill offer will be capped at £15mill up until Jan 31 year end, it is probably worth participating in, certainly we should end up with rather more shares for our money than the unfortunates (me included) received in Oct 2018 !