Safe AIM stocks 2 – bottom up AIM IHT planning

Today we’re going to approach the topic of AIM IHT planning from the bottom up, by looking at asset manager literature and newspaper articles.


Last week we looked at Safe AIM stocks from the top down.

We took the AIM 100 – the largest 100 stocks from the junior market – and assessed whether they were desirable and eligible for an AIM portfolio designed to qualify for Business Property Relief (BPR), which makes assets exempt from inheritance task (IHT).

  • It was pretty tedious, and we only got a third of the way through the job.
  • More importantly, our research revealed that there is no definitive list of which AIM stocks qualify for BPR. There are some guidelines that let you guess at the stocks that could be excluded, but no rules.

Quite a few asset managers / product providers exploit this lack of information to charge through the nose (2% upfront, 2% pa in some cases) for IHT AIM portfolios.

So today we’ll turn the tables on them by combing through their literature and puff-piece articles to come up with a list of which stocks they hold and don’t hold.

These will then form the core of our AIM IHT portfolio, perhaps double weighted against the additional stocks that we find from our top down approach2

After a bit of digging around, I’ve managed to find ten sources of information – five magazine articles and five reports from asset managers.


Investors Chronicle (Canaccord Genuity article)

Yes = James Halstead (JHD), Nichols (NICL), Young & Co’s Brewery (YNGA), Goals Soccer Centres (GOAL), Majestic Wine (MJW), Telford Homes (TEF)

What Investment (Miton article)

Yes = Youngs, Nichols, Manx Telecom

Motley Fool

Yes = FW Thorpe, James Halstead, Asos, Majestic Wines, Advanced Computer Software, K3 Business Technology

Sadly Advanced Computer Software has since been sold to private equity.

Shares Magazine

Yes = CVS, Gama Aviation, Youngs, RWS, GB, Staffline, Stanley Gibbons, Majestic Wine, Nichols, Alliance Pharma, James Halstead, Smart Metering Systems, Abcam, Walter Greenbank, Fyffes (dual listing but on Irish Emerging Securities market, which is allowed), Robinson (packaging, with “residue” property holdings only)

No = GW Pharmaceuticals (Nasdaq listing), MP Evans (palm oil and joint venture), Falkland Island Holdings (property, oil and gas), Abbey (property investment), Argo (investment company), Camco (associates and joint ventures)

Shares magazine is the only publication to rule out some firms on the basis of their activities or dual listings.

Daily Telegraph

Yes= Character Group, Alternative Networks, Zytronic


Fundamental Asset Management

Yes = ASOS, Nichols, Mulberry, CVS Group, RWS Group, James Halstead, AB Dynamics, Netplay TV, Majestic Wine, Quartix Holdings, Jarvis Securities, Manx Telecom, Abcam, Advanced Medical Solutions, Alternative Networks, Hayward Tyler, James Latham, Red24, Smart Metering Systems

Fundamental also noted that the sectors of Real Estate, Investment Companies and Banks were excluded for IHT planning.

Oil and gas were also omitted because of their speculative nature and common dual listings.

Octopus Asset Management

Yes = CVS Group plc (Healthcare), Renew Holdings plc (Support Services)
Staffline Recruitment Group plc (Support Services), Advanced Medical Solutions Group plc (Healthcare), RWS Holdings plc (Support Services)

Gamma Communications plc (Telecommunication Services), Restore plc (Support Services), Scapa Group plc (Chemicals), GB Group plc (Software & Computer Services) Abcam plc (Pharmaceuticals & Biotech), M&C Saatchi (Marketing Agency), Next Fifteen Communications, Walker Greenbank, Gooch and Housego, Youngs

Amati Asset Management

Yes = Sprue Aegis (smoke alarms), Nichols, EMIS group (health software)


Yes = Tracsis, Sprue Aegis


Yes = RWS, Scapa, Alternative Networks, James Halstead, Gooch and Housego, Nichols, Advanced Medical Solutions


I’m very pleased with today’s results.

After wading through all those documents, we have a list of 44 companies that qualify for BPR, and have ruled out six others that don’t.

Safe AIM 1 to 22

I’ve listed the firms in order of market cap.

  • The average (mean) market cap for the 44 firms is £342M, which is very satisfactory.
  • This is skewed by the £3.1 bn market cap of ASOS, and only 15 of the 44 firms have a market cap greater than the mean.
  • But the median market cap is £231M, which is fine.
  • There are six companies with a market cap of below £50M, which I might be tempted to avoid.
  • There are also four firms that are currently loss-making, which again might not be included.

Even in the worst-case scenario, that leaves thirty-four stocks that we could use, putting us almost 70% of the way towards our 50-stock target, and well-past the 20 stock minimum.

It’s worth pointing out that these stocks are not cheap, with an average trailing PE of 43 (or 47 if I substitute a value of 100 for those companies that are loss-making).

  • The median PE is 27, which is somewhat better.

These high valuations may be because the companies qualify for BPR and are held in a lot of IHT portfolios.

  • I might deal with this by double-weighting the cheaper stocks.

Next week I’ll run through the 2016 AIM 100 (which the Investor’s Chronicle has now released from behind its pay wall) to fill in the gaps.

Until next time.

This article was written by Mike Rawson

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