UK 16:45 Sunday, 1 November 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
In a series of articles looking at the plethora of sub-scale investment companies on AIM and the issues that arise for investors, I start by reviewing Blue Star Capital (BLU). In this first piece, I will look at the vagaries of private company valuations.
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Comments
Drunken Sailor
Following the arrival of shitty little investment companies on the standard list, I was forced to amend my golden rule of never buy shares in shitty little AIM investment companies to never buy shares in any shitty little investment company. What is the point of buying shares in any investment company that in turn buys shares in listed companies – you might as well cut out the middle man and do it yourself – REM a classic example. Investment companies that buy shares in unlisted companies are a real problem, because the vast majority of those investments will never make a return for the investment company and are therefore just money down the drain.
Well done for finding a shitty little AIM investment company whose main investment is in an unlisted investment company who in turn has its main investment in an AIM listed dog. I applaud your tenacity in researching this, I would have gone no further than seeing it was a shitty little investment company and applying my golden rule.
stone the crows
VELA also has a small interest in DTL.
Bob the brush
investment company that has £400,000 in assets, spends £200,000 a year. so, just for investors in this investment company to break even, the value has to go up 50% a year. but the asset is just another shitty investment company, and then the sub-sub investments are just shitty private companies.
People buy this shit? wow.
it is so common for investment trusts and funds etc. to just invest in others and each other, and its a merry go round of paying middlemen and city salaries that generates 0 value for investors but somehow its still prevalent. god knows why.
Cynical Bear
@ Stone the Crows – thanks, I saw that, Vela is an interesting valuation research exercise as there are anumber of private companies in there
@Drunken Sailor / Bob – you’ve mentioned the points I was going to make in my next piece (and probably more succinctly too) but I’ll go with it anyway!
Bob the brush
Cynical bear, please do go ahead! I am sure you will put it together more eloquently and get a good case study or two. me ranting in the comments section will be seen by about 4 people so get the word out there in headlines! investment companies that invest in investment companies are the gutter of the stock market.
BRITTA
Another short and snappy dissection of a company that even CB admits is of no interest to readers of this website. CB, I’m really not convinced of this as a journalistic business strategy, but hey what do I know.
If you do want to do shitty little investment companies, then why not pick on those that are the darlings of the Twittersphere? Why is it that shells are suddenly so popular and are getting ramped to high heaven? I think Tom has already alluded to one big reason – at the end of a bull market you run out of real good stories (backed up by evidence and numbers – like cash-flow), and instead all you are left with are speculative situations where you can push the “hope” angle.
Shells make perfect speculative material. They are easy to promote (“CEO is a whizz kid who will strike deals blah blah”) because there’s no substance to counter those claims with fact. A bubble of hot air is very hard to prick.
What would be very interesting then is a critical analysis of the sort of features that make a shell attractive for this sort of orchestrated promote, and the “Tulip mania” disconnects between NAV and mcap that we have seen at places like CHA and others. That would be of interest to a lot of this site’s readers (as well as likely to annoy a whole lot more).
shares321
Cynical bear, this was a interesting piece and I look forward to your next article/s on other AIM investing companies. I believe one of the benefits of being listed is that a investment company (that invests in illiquid small caps) can buy back it’s own shares at a significant discount to NAV. Over time this allows a investment company to increase in value (ORA capital being a good example). However, your article illustrates why this only works when a investment company is over a certain size. What is the minimum size a investment company can be in your opinion?
Cynical Bear
@Britta – thanks once again for providing critical feedback, it is very helpful for me as a relative newbie. A couple of points.
1. My natural style which you suggested I try to develop isn’t “This is a great stock, buy” or “This is a shit stock, sell”. It is more that there’s something that I find interesting or useful as part of investment analysis / research so can I find a company that exhibits that in a positive, or more usually negative, way and describe it in a light-hearted, sarcastic manner.
It may or may not be of interest to others but the beauty of this site is that it is a meritocracy in that regard. If people don’t like it, Tom will tell me to stop writing – fair enough.
2. Your general point is excellent. However, I do realise that I am nowhere near good enough a writer to pen a snappy, funny theoretical precis of “Extraordinary Popular Delusions and the Madness of Crowds” in 1000 words or less so will just make do with highlighting certain features over time in the context of company case-studies
3. I do draw a distinction though two different types of bubbles. Those that I think of as more organic such as Tulip-mania, the tech bubble of the late 90’s /2000 or even buying a lottery ticket which grow out of an innate behaviour in many people of seeking easy money and I believe that will remain whatever I or others write.
On the other hand I also see inorganic bubbles which are actively promoted / created by companies and/or individuals to target such behavioural traits and I would put the South Sea Bubble and the current cash shell / investment company enthusiasm in that category. This can be prevented / reduced by pressure on those individuals or companies concerned and I believe this site has a role to play in that.
I hope you keep reading, find the odd piece to enjoy and please continue providing feedback.
@Shares321 – Good point on one of the general benefits of an investment company but you are talking about very different beasts there!
I’m sure there’s analysis on the minimum size and I would just be guessing but intuitively for me it is about being able to cover your general running costs out of a reasonable management fee of 1-2%, I do know of a couple of private VC type funds with less than £10m of assets that struggle on by but run themselves on an absolute shoe-string and would definitely not go near AIM! Personally I think one needs well over £25m AUM as a start.
Cynical Bear
One last thing – a couple of people have commented on the fact on LSE that I ignored the value of VNU in my analysis.
Just to provide a bit more of my research.
This link – https://www.linkedin.com/pulse/vnu-retail-group-llc-announces-investor-relations-access-porcelli – shows that they are shifting their focus away from their retail offering and looking to raise new funds at the moment to provide the funding via their own captive vehicle pacificcredit.com, presumably as the mainstream banks are shying away from this space.
One will note the reference to almost $500m sales in total, 500,000 customers and a run-rate of $23m EBITDA. Sounds great right?
Well a bit more digging unearthed this deposition from Bob Malina from 2011 – http://www.impactcashreceivership.com/wp-content/uploads/2011/09/MALI0829.pdf – which shows that these revenues and earnings were almost all from pre-sub-prime crash before 2009 from VNU and the predecessor business. The business hasn’t done anywhere near as well since, hence the lack of news and the shift in strategy and the need to raise further funds.
In summary, I’m happy with the analysis above but wish all those on LSE with a different opinion well