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AIM-listed companies should consider targeting retail investors before institutional investors for several reasons.

Firstly, AIM companies frequently encounter constrained trading volume, so each transaction affects the stock price and thereby exerts a more pronounced influence on its price dynamics. Within the realm of AIM, numerous stocks have market caps spanning from £10m to £40m, and a portion of these equities observe daily trading volumes below £2,500.

When retail investors actively participate in a low market cap stock, their involvement can attract day traders and stock jockeys. Day traders are individuals who engage in short-term trading strategies, aiming to profit from intraday price movements. Stock jockeys, on the other hand, are investors who actively trade stocks based on short-term and mid-term market fluctuations. The entrance of these participants increases the trading volume, injecting liquidity and generating more market interest. Day traders and stock jockeys tend to follow retail money.

The increased trading volume and heightened market activity in the stock will attract the attention of hedge funds and HNWIs. Both hedge funds and HNWIs are more inclined to invest in stocks with higher liquidity and trading volume as it allows them to execute their investment strategies more effectively.

The participation of hedge funds and HNWIs further contributes to the surge in daily trading volumes of the stock. As their involvement becomes more apparent, institutional investors, such as mutual funds, pension funds, and other large-scale investment entities, take notice. Institutional investors typically allocate significant amounts of capital and have the potential to drive substantial buying or selling pressure in a stock. Their participation validates the stock’s attractiveness and often leads to further price appreciation.

Five Phases to Attain Mid-Cap or Large-Cap Status:

1: Retail investors participate in low market cap stocks.

2: Their participation attracts day traders and stock jockeys, increasing the trading volume.

3: Increased trading volume attracts hedge funds and HNWIs.

4: The participation of hedge funds and HNWIs further boosts daily trading volumes.

5: Institutional investors, observing the increased activity and liquidity, join the stock.

Through this way, targeting retail investors in AIM-listed companies creates a chain reaction that gradually attracts higher-tier investors, eventually drawing the attention of institutional investors.

Stuck in the 90’s, Lost in the land of synergy.

While millions of Brits are familiar with cryptocurrencies like Bitcoin and Dogecoin, they remain unaware of the AIM market. London City has not succeeded in effectively promoting the UK capital markets to the British population. This can be attributed to its lack of adaptation to modern trends and remaining rooted in outdated practices, giving it a perception of being stagnant, outdated and stuck in the 90s.

UK investor relations companies have struggled to fully uncover the golden formula that emphasises targeting retail investors in the case of AIM-listed companies. Since 2021, Wall Street discovered and implemented this formula, leading to remarkable results and immense successes. By recognising the significance of targeting retail investors before institutional investors, Wall Street harnessed the potential of individual investors to drive market activity. This strategic shift has not only increased liquidity but also attracted the attention of institutional investors, creating a cascading effect that fuels further market participation. The success of this approach has been evident in the form of heightened investor engagement, increased market caps, and overall market growth. It serves as a testament to the importance of leveraging the power of retail investors in shaping the dynamics of the financial markets.

Everyone’s fighting over institutional capital, nobody is trying to attract retail capital. While others battle for this institutional capital, we help firms intending to own retail capital.

IR efforts in the UK predominantly focus on attracting institutional capital, neglecting the benefits of engaging with retail investors, particularly through social media platforms. By neglecting to target the pool of capital held by retail investors, investor relations firms place themselves in a position where they inadvertently deprive their clients of value. This system has had adverse effects on the UK capital markets and the broader economy, as the lack of retail investor involvement hampers liquidity and limits the potential for growth and funding opportunities for these smaller companies. Recognising the potential of retail investors and modernising strategies to target this segment will help address the capital deprivation issue faced by AIM-listed companies in the UK. This isn’t just a financial problem; this problem affects the whole UK economy.

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