The Investment Column: Celebrate AIM's tenth birthday by all means, but try to diversify your risk

Geldof's Ten Alps looks near its peak - Majestic Wine's worthy of attracting more support

Let us be the first to congratulate AIM, the London Stock Exchange's lightly regulated stock market for small and growth companies, on its 10th birthday this coming weekend.

Oh all right then, not exactly the first. The market has been feted as a soaraway success story for most of the past two years, as even mid-sized companies have shunned a main listing and opted for flotation on AIM. It is attracting record numbers of companies who are raising record amounts of cash. And, one by one, institutional investors have dropped their objections to taking AIM-listed shares, ensuring there is a pretty liquid market in many of the major stocks.

The Investment Column this week will be focusing entirely on AIM shares. As one fund manager put it yesterday: "Institutional investors make no distinction now between an AIM and a full-list company, while many private punters probably don't know where their companies are quoted. The issues for AIM companies are the same issues as for all small companies."

Well, up to a point. The main market operates on a different principle from that operating on AIM, where the regulators operate much more of a caveat emptor approach. Companies with short trading histories and directors with colourful track records are screened out before they reach the main market, but on AIM they are allowed in with a pretty full disclosure demanded in the prospectus. The small shareholder needs to dig deeper before deciding to invest.

This is one of the reasons the Exchange has tried to clamp down on cash shells (listed mainly as "speciality and other finance" in our pie chart above) - because there is so little information published in which to dig, and so much idle speculation on the bulletin boards. In these stocks, everything is stacked against the private investor, who will neither be buying in on the advantageous terms available to the directors and their friends, nor with the knowledge of the insiders' plans.

What AIM can be especially good for is allowing the private punter access to early-stage companies that might otherwise be making money only for venture capitalists or business angels. In return for the higher risks, AIM shareholders get decent tax perks, but the key as ever is to diversify your risk. An investment in a venture capital trust, which can invest in AIM shares, is a way of spreading risk.

Geldof's Ten Alps looks near its peak

Ten Alps Communications is famously the television production company where Sir Bob Geldof is a director and 8 per cent shareholder. The company is making Geldof in Africa, Live Aid Day and Peaches USA, presented by Peaches Geldof, but is much more than Mr Geldof's personal vehicle.

The company delivered more than 50 factual TV programmes in the year to March, sending profits up fivefold to £628,000. While the company does have a long-term interest in Teachers' TV, a government-funded education channel, running till 2008, it was honest yesterday that it is difficult to see much further than six months out in terms of new commissions.

TV production is a sexy area at the moment, with the more populist programme makers Shed Productions and RDF Media having done well since their AIM floats this year. Independent producers have strengthened their hand in negotiations with the broadcasters and ought to be able to wring cash out of their back catalogues as the number of digital channels grows.

But Ten Alps has less exciting advertising and events management arms and its shares, at a record 57p, look toppy. Avoid.

Majestic Wine's worthy of attracting more support

All you patient Majestic Wine investors out there must be thinking now, surely, is the time to indulge. All those shares you laid down as long ago as 2001, when this column started tipping the stock, must be reaching maturity, mustn't they? They have almost quadrupled in value since then.

While other retailers flounder like a man blind drunk, the wine warehouse group yesterday revealed that annual profits had fizzed higher for the 12th consecutive year. Underlying UK sales during the past 10 weeks have bubbled up 7 per cent, which although a slight slowdown from last year's 8.3 per cent growth is still ahead of the market.

Majestic's customer numbers were up, the amount they spent per visit was up and so was the average price of a bottle of wine. Its operating margin rose 80 basis points to 7.8 per cent, helping pre-tax profits before an exceptional property gain and goodwill amortisation, to jump 24 per cent to £13.2m.

Out of that little haul, it isn't too surprising that someone slipped in the odd bottle of dodgy Piat d'Or. Namely, its three French outlets, located in the channel ports, which have suffered from the drop in passengers using the ferries.

More pertinently, in the UK there is still plenty of scope for Majestic to grow its 122-strong estate. It likes to open about seven sites a year, which means it will not hit its target of 200 stores for some time.

Like all good wine investments, there is a risk that Majestic will pass its peak. But with so much scope for expansion on the cards, there is no need to raid the cellar yet. Indeed, keep stocking up.