Small Caps Dominate Annual Top 100 London Stock Market Performance Awards

With the FTSE 100 (UKX) touching a confidence-boosting 6,000 points just before Christmas, markets approached the year end in buoyant mood.

In 12 months that saw the AIM All-Share (FTAI) index begin to stretch its legs towards levels not seen since before the economic downturn, it was little surprise that many of London’s top stock performers this year were among the small caps.

While AIM’s detractors point to the damage caused by surging numbers of de-listings through the economic downturn and the negative effects of a stymied flow of new entrants to the market, others are more upbeat.

The general consensus among analysts is that the swingeing effects of the economic squeeze has stripped AIM of those companies that were ill-equipped to be on the market in the first place.

And while the overall value of AIM has fallen by 14% over five years, those companies that have slashed costs and navigated two years of economic turmoil are now well placed to grow.

In turn, those institutions that balked at the prospect of small cap investing during that period could be about to witness a string of missed opportunities.

Investors in any of the top 10 best stock market performers in 2010 would have enjoyed gains in excess of 700% and those that backed the winner and runner-up were dazzled with a 2,000%-plus value boost. And so onto Stockopedia’s Annual Top 100 Stock Market Performance Awards, a performance round-up that sounds out the most expert panel of all – the collective wisdom of the entire stockmarket.

The top 10 best performers in the Top 100 summed up the mood of the markets this year. Commodity players in gold, silver, oil and gas all benefitted from attractive supply/demand fundamentals and retail investors that were warming to higher risk exploration plays. Gold broke $1,400 an ounce and analysts generally agree that $1,500 is likely soon (with a possible rise to $2,000 by the end of 2011). Likewise, silver continued a two-year market run to close 2010 at over $30 an ounce – its highest level for 30 years. Meanwhile, the price of oil rose from $76 a barrel to $94 between September and December, with industry watchers now expecting the price to break $100 during 2011.

The first prize in Stockopedia’s Top 100 Stock Market Performance Awards goes to The Parkmead Group (LON:PMG) , whose appointment of ex-Dana Petroleum boss, Tom Cross, helped to deliver a 2,600% share gain despite the company’s asset base comprising just a 2.5% stake in Faroe Petroleum – an exploration and production group which enjoyed a more modest 50% share gain during the year. One Stockopedia contributor observed that, “If Cross were to sell his Parkmead shares today he’d have made more than he made from Dana in 10 years” and, even in these crazy times, that doesn’t seem quite right, so all eyes will be on the Parkmead team in 2011 to see if they can deliver the rampant M&A activity and operational outperformance that this share price spike seems to suggest.

The runner up this year – beaten in the final stretch this week – was Condor Resources (LON:CNR), a gold and silver explorer working in Nicaragua and El Salvador, which saw its share price rise over 20 times from 0.4p to 9.7p during the year, taking its market cap to £48m. Condor has been quoted on AIM since 2006 but some fancy footwork in the aftermath of the economic downturn saw it mop up a string of licences that had been relinquished by larger players in the region. A focus on getting somewhere in mining-friendly Nicaragua and an asset swap deal with Canadian miner B2Gold won it the attention of investors and boosted its JORC compliant inferred resources to 788,000 ounces of gold and 22 million ounces of silver. One can only imagine how smug long-term holders of Condor Resources must have been feeling this Christmas!

In third place was Arian Silver Corp (LON:AGQ), a London and TSX listed silver miner which kicked off production from its San Jose mine in Mexico this year, triggering a 1,300% share price gain and a market cap of £120m. CEO Jim Williams, who spoke to Stockopedia in December, not only delivered his shareholders some stable cashflow but also the promise of huge upside as exploration on Arian’s land holding continues.

Other miners in the top 10 included Red Rock Resources (LON:RRR) at number six with a 737% gain as impending gold production from interests in Colombia and progress at operations in Kenya and Australia won it favour among investors. Sunrise Resources (LON:SRES). closed the year at number seven following a late surge and an overall 730% gain on the back of upbeat assessments of drilling work at its Long Lake Gold Project in Ontario, Canada. Beowulf Mining (LON:BEM) came in at number 10, with a gain of 700%, taking its value to £47m. The company raised £400,000 in October at 5.75p per share in order to fund drilling work on its Kallak iron ore project in Sweden. Its share price went on to surge to 28p after results from that drilling programme indicated that Beowulf was sitting on a world class deposit. 

Otherwise, oil & gas, the perennial favourite among high risk, high reward investors, dominated the top 10 performers Niche Group (LON:NGP) secured forth place in the table after the pre-IPO investment outfit acquired a stake in an onshore Turkish gas discovery via a strategic investment in Oman Resources. That deal went on to earn it a 900% share gain and a market cap of £16.5m.

Elsewhere, Encore Oil (LON:EO.) came in at number five with an 800% gain on the back of significant North Sea oil successes during the year. The excitement started in June with the Catcher discovery which was followed by a better than expected result from an appraisal well on the Cladhan prospect in August. Success at Catcher was enough to help push one of EnCore’s partners on the project, Nautical Petroleum, to number eight in the Top 100 performers.

The only top 10 appearance that doesn’t currently rely on a drill bit was Premier Management Hldgs (LON:PMA) , the football agency business. Not so fast however, as the company’s 750% share gain was sparked after chairman Barry Gold acquired the operating assets in November, leaving the shell group toying with the prospect of adopting a new business model – you guessed it, exploring for gold, this time in Kyrgyzstan.

Turning then to the Sector Awards, firstly, the Technology Hardware Award goes to semiconductor manufacturer Cml Microsystems (LON:CML) , which placed 16th within the Top 100 with a 520% share gain. Improving global economic conditions and stronger export markets helped the company breathe new life into its flagging share price, which rose from 26p to around 161p during the course of the year. Speaking to Stockopedia in June, managing director Chris Gurry, said he was confident that the company would be back to profitable ways in 2011.

The Media Award goes to broadcast equipment supplie. Avesco Group Plc (LON:AVS). which led the way with a 509% share gain that started back in February when Israeli rival Taya began ramping up its stake in the company. Avesco said it had rebuffed an offer, which it reckoned would have been priced at around 28p to 35p per share. It went on to close the year at around 122p and ended up at 18th in to Top 100 best performers.

The Real Good Food Company Plc (LON:RGD) Company picked up the Food Award after delivering a 448% share gain and 22th position overall in the Top 100 performers. The bakery, ingredient and sugar group that counts Waitrose and M&S among its key customers, emerged from restructuring earlier in the year and has since won over investors with a series of upbeat trading reports.

In the Retail sector, it was all about luxury bag brand, Mulberry Group (LON:MUL). The AIM listed leather goods group started the year with a share price of 170p but that all changed in June when the company reported rapidly growing sales and profits as demand picked up in all markets. The shares went on to top 950p and eventually delivered an overall 427% gain and position 24 in the list. Mulberry rounded off the year by picking up the Best Designer Brand at the British Fashion Awards in December.

Lacking in quite the same glamour but delivering every inch the same precision engineering, hi-tech manufacturing group Elektron picked up the Industrials Award with a share gain that topped 423%, which earned it position 26 overall. Like many of its peers, Elektron (LON:EKT) slashed costs to stave off the effects of recession but still managed to grow profits during the year. The acquisition of Hartest Hldgs (LON:HTH) Holdings over the summer was a statement of intent that the Elektron management team were keen to expand and make the group more attractive to a wider range of investors.

The Software Award goes to online video search engine Blinkx Plc (LON:BLNX) , which was the clear winner, and 29th overall, with a 400% share gain that began in mid-May when the company reported that it was finally in Ebitda-positive territory. Speaking to Stockopedia at the time, CEO Suranga Chandratillake said the performance had de-risked the business from an investment point of view, which made it “a much more interesting prospect going forward”

At position 33 in the Top 100, Central London property developer Northacre (LON:NTA) picked up the Real Estate Prize after delivering shareholders a 330% value uplift on the back of a robust performance in the face of tough conditions. Shares in the group – which has most recently been involved in the development of The Lancasters on Hyde Park – began to motor in July after chairman and CEO Klas Nilsson said a newly arranged financing deal meant the company would be embarking on more developments in the near future.

In Banking, it was clearly a sorry tale. The likes of Allied Irish Banks (LON:ALBK) have obviously suffered hugely and, while Barclays (LON:BARC) and Royal Bank Of Scotland Group Plc (LON:RBS) have done well to recover from the lows of 2009, no bank placed in the top 100 stock market performers. The best performing financial services company (apart from the erroneously labelled Parkmead) was a VCT – Downing Distribution VCT 1 – which came in at number 36 with a 330% share gain. It is amusing to note that the bank that did best this year was the Bank of Georgia, which came in at 139 – perhaps there are no words in Georgian that begin to describe securitisation?

Of the 74 telecommunications players listed in London, it was left to one of the smallest, mobile content retailer Mobile Streams, to pick up the Telecoms Award after delivering a share gain of 280% and an overall placing of 52 in the Top 100. The good news for Mobile Streams (LON:MOS) began in September when it announced strong half-year revenues and profit growth. The shares went on to rise from 4p to 24p in just eight weeks.

The market for crop nutrition and natural pesticides is surprisingly well populated on London’s AIM market, comprising the likes of UK operator Plant Impact Plc (LON:PIM) and US firm Plant Health Care (LON:PHC) . However, it was another US company, Tyratech Inc (LON:TYR) , that took the Chemicals Award this year after delivering a 230% share gain and position 65 among the top performers. TyraTech’s success was boosted by closer and closer ties with Terminix, one of the largest pest control companies in the world.

Finally, the Healthcare Award went to surgical products specialist Surgical Innovations Group (LON:SUN) , which recorded the highest rise, at 223% and 70th position in the Top 100, after streamlining its business during 2009 and going on to drive up revenues and profits. Surgical Innovations’ expertise in developing products that are used in minimally invasive surgery procedures such as keyhole surgery, won it a Queen’s Award for Enterprise in April.

That’s it for this year’s awards. Has it all been a function of speculation in a renewed stock market bubble based on oodles of quantitive easing and are we destined for a slow growth economy, with stocks out of favour? Or is this raciness a sign that the stockmarket is on the mend and that – as the government hopes – smallcaps will be a driver of the UK economic recovery? We’ll see you next December when we find out (part of) the answer and see whether next year’s winners can possibly improve on these kinds of spectacular returns. And don’t forget – for every Condor Resources, there’s an Arteon (LON:ARTO) (down 98% on the year and currently suspended), so safe and judicious investing!

The Ones That Got Away: Top 100 UK Stock Market Performers in 2010

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