However, not every public launch is everything it’s cracked up to be, especially in the small to mid cap space where companies often have just as good a chance of failing as they do of making record profits for their investors.
Still, those tantalisingly large gains make investing in a company early on attractive. FE Trustnet looks at five of the highest grossing companies that came to market over the last 20 years.
Asos – 22,153%
When the stock was first admitted to the AIM market in October 2001, it surged more than 3 per cent in the first three weeks of trading; however, by the fourth week investors in what is now the UK’s largest online clothing retailer would have been back to square one.
But the real story behind Asos is its unparalleled long-term growth. Over the last 12 years since the stock entered the market, it has gained a phenomenal 22,153.09 per cent, meaning a £1,000 investment in the stock at IPO would now be worth more than £220,000.
The AIM index has gained what seems a paltry 1,095.47 per cent by comparison.
Performance of stock vs index since IPO
Source: FE Analytics
The stock’s momentum appears to still be gathering pace. The company has set out to be "truly global" and with its recent launch in the US promises to access the consumer force in the world’s leading economy.
Just this year Asos has picked up 94.33 per cent while the AIM index has made 12.51 per cent, according to FE Analytics.
Only 12 funds in the IMA universe count the stock among their top-10 holdings, including FE Alpha Manager Harry Nimmo’s Standard Life UK Smaller Companies fund, which holds more than 5 per cent of assets in the stock. Baillie Gifford British Smaller Companies and Baillie Gifford UK Equity Alpha also have significant exposure to the stock.
Aveva Group PLC – 3,714%
Much like the Royal Mail, Aveva Group grew out of the Government-funded Computer-Aided Design Centre (CADCentre), which was established back in 1967.
The engineering design, information solutions and software technology firm was first listed on the London Stock Exchange in December 1996.
Since then, it has accrued an impressive 3,713.57 per cent, meaning a £1,000 investment in what was then named the CADCentre would be worth £38,135.73 today. The FTSE 250 made 459.76 per cent over this period.
Performance of stock vs index since IPO
Source: FE Analytics
CADCentre changed its name to Aveva in 2001.
The stock is again a favourite of FE Alpha Manager Nimmo, who holds 2.8 per cent of it in his Standard Life UK Smaller Companies fund. Only six other funds in the IMA universe hold the stock in their top-10, including Jupiter UK Smaller Companies and the Close FTSE techMark tracker fund.
Domino’s Pizza – 2,594%
Although Domino’s Pizza was founded in the US, it came to market in the UK before it did in its home country.
The international pizza giant partially listed its shares on the LSE in 1999.
Since then, it has picked up 2,593.82 per cent, or nearly £27,000 for a £1,000 initial investment. Investing in the underlying FTSE 250 would have netted just 267.25 per cent over that time.
Performance of fund vs index since IPO
Source: FE Analytics
In spite of the stock’s stellar performance, only three funds in the entire IMA universe hold the firm in their top-10.
ARM Holdings – 2,530%
Investors would have had to have had nerves of steel to have reaped the stellar gains from this firm: after gaining more than 2,000 per cent at its peak in 2000, the stock tumbled back to nearly zero and languished near its launch price for more than five years.
But investors who bought the British semiconductor and software design company when it came to market in 1998 and held on to it during the disappointing years from 2000 to 2009 would have seen returns of 2,529.87 per cent, or more than £26,000 on a £1,000 buy-in.
Performance of stock since IPO
Source: FE Analytics
Sixteen funds in the IMA universe hold the FTSE 100 engineering firm in their top-10, including FE Alpha Manager John McClure's Unicorn Free Spirit and FE Alpha Manager Giles Hargreave's Marlborough UK Leading Companies portfolio.
Hargreaves Lansdown – 546%
Few financial services firms have experienced such a meteoric rise as Bristol-based Hargreaves Lansdown.
The funds and equities distributor was first listed on the London Stock Exchange in 2007 and entered the FTSE 100 after just four years.
The stock has gained 546.16 per cent since coming to market, compared with 27.21 per cent from the FTSE 100.
Performance of stock vs index since IPO
Source: FE Analytics
Investors who had the foresight to put £1,000 into Hargreaves Lansdown just six years ago would already have £6,461 in their pocket. Another boon for the stock is that is it paying out an attractive dividend, currently 2.3 per cent, which is expected to rise to 3.1 per cent in June next year.
Only seven funds in the IMA universe count Hargreaves Lansdown among their top-10 holdings.
Again, star smaller companies manager Harry Nimmo is backing the financial services firm in a big way, holding 4.6 per cent in his Standard Life UK Smaller Companies fund. FE Alpha Manager Nick Train is also a fan, with 6.5 per cent of his CF Lindsell Train UK Equity fund in the company.
