AIM shares: Winners and losers from the Covid-19 pandemic

We met with several AIM Inheritance Tax ISA investment managers over a video call in November and December and asked: Who have been your winners and losers so far from the Covid-19 pandemic?

You may be surprised how varied the answers are, with 34 different companies mentioned. 

You can watch the video and read a summary of what they told us below. The interviews are ordered by featured investments first and then alphabetically by firm name.


Important: these are edited excerpts of several interviews conducted over Zoom during November and December 2020. The views expressed here are those of the individual managers and not necessarily those of Wealth Club. Please remember, past performance is not a guide to the future and dividends are not guaranteed. AIM ISAs invest in smaller companies and can be volatile and high risk: you could lose the capital you invest so only experienced investors should consider them.

Investing in AIM – Octopus-min.jpg

Comments from Richard Power, who manages the Octopus AIM Inheritance Tax service

“It's been an unfair crisis – there have been sectors that have been left fairly unscathed, some that have been beneficiaries of changing behaviours or accelerated trends as a result of the Covid-19 crisis, and of course there are sectors that have been hard hit.

“There have been areas of the economy that have done extremely well – software companies, communications companies – so companies in our portfolio like Gamma Communications, like IMImobile, like GB Group have been resilient. We do have a balanced portfolio so we do have some exposure to some of those harder hit portfolios, but the key point here is that these are very well capitalised businesses with strong balance sheets, and so we haven't had to sell any businesses because we would be concerned about them getting through this crisis.

“A good example would be Young & Co’s Brewery – it's a very well capitalised business, £150 million of financial headroom, they predominantly own freehold assets and it's going to be operating in an environment in a couple of years’ time with significantly less capacity and competitors in the marketplace. So we tend to look ahead and through any short-term headwinds and try and establish where this business is going to be in three or four years time when we make our investment decisions.”

Investing in AIM – Downing

Comments from Judith MacKenzie, who manages the Downing AIM Estate Planning Service

“We’ve had some companies that have been almost quasi-Covid beneficiaries – not that we meant them to be, but companies like EKF [Diagnostics Holdings plc], who manufacture and distribute solutions for haemophilia and for diabetes. They have also taken part in the growth of testing, and they have a Covid testing solution that has actually meant that their earnings in these next couple of years will more than double. So that’s one of the successes. 

“I think some of our companies have been overlooked a little bit, because they are quite small, and we have a bit of a job to do – we’ve got to make sure that we raise their profile and show the quality of the earnings and the balance sheets within those portfolio companies.”

Investing in AIM – Fundamental

Comments from Chris Boxall, who manages the Fundamental AIM ISA

“The primary loser for us early stage was Jet2, previously called Dart Group, which is a leisure airline. We hadn’t held the shares for that long and it fell precipitously very quickly. Thankfully we kept hold of it and we actually added to our new portfolios and it’s bounced very strongly, although still has some way to go. Johnson Service Group is a provider of laundry services for workwear and also for the hotel, restaurant and catering sector – we sold that stock, we didn’t want too much exposure to that area. Watkin Jones is a large developer of student accommodation and build-to-rent – but we still like that business and have been buying it again recently, we think the valuation looks good and the growth profile is still intact. Another loser, ironically, has been in the healthcare sector: Advanced Medical Solutions, a provider of wound care and surgical dressings. Its business has been hit because surgical operations have been postponed.

“In terms of winners we’ve had a nice position in the video gaming sector, so we’ve done pretty well out of that – Team17 Group and Codemasters are both publishers of video games. Other winners have been Dot Digital, a provider of omnichannel marketing, and Focusrite , a provider of audio products in the music business, they have done very well. We’ve held these businesses for a long time, they’ve had this pandemic boost but we think their growth profiles still look good.”

Investing in AIM – Puma

Comments from Justin Waine, who manages the Puma AIM IHT Service

“Probably our best performer is a company called Dot Digital – a provider of marketing software online. As people have had to work from home and have used more online services, more demand has come for these software companies. The other side of that is that people are stuck at home with less to do, so probably our second best performer is Focusrite, which provides equipment and software for people who want to broadcast music on the internet – essentially the boxes that sit between a computer and a musical instrument – and they’ve had very strong growth.

“We had one retailer, Joules, which was badly hit, but I think that’s more down to a combination of macroeconomic events and liquidity, given how much of that business has now gone online – I think prior to the pandemic it was at 50% online, I think it’s now somewhere around 75% online. 

Strix, which is a manufacturer of kettle components, is interesting because in February we were more worried about the coronavirus impact on that company than any other company in the portfolio, because most of its factories and many of its customers are in China. It has actually delivered strong performance this year, because China has managed to recover from the pandemic relatively quickly. So it has been less impacted than many of the businesses that we own that have exposure in the UK, Europe and North America.”

Investing in AIM – R C Brown

Comments from Oliver Brown, who manages the R C Brown AIM ISA

“Online gaming companies such as Team17 and Sumo Digital – both computer game developers – have done well as people had more time on their hands. Some people got into gaming for the first time, some consumed more of it, and some of those newly-won customers will continue to consume gaming.

Hotel Chocolat we were concerned about – it has a lot of stores high street – but it had always had a good online presence. It originated as a mail order company, so they have good experience in not having stores and were able to shift a lot of their operations online. Open Orphan is a healthcare company that runs vaccine trials on human beings – they’ve been busy, and we expect their services to continue to be in demand as there’s now greater focus on vaccine development.

“Some companies have found things harder going – we have held some companies in the construction industry, the likes of Watkin Jones, which builds and manages student accommodation. During the first lockdown there was uncertainty as to whether students would be going back to university; now, on the whole, they have. Another company, Brickability, which is a brick supplier to major house builders – again, during the first lockdown there was great uncertainty, and projects were being put on hold. But now, in both those cases, what you’re starting to see is their trade has picked up and both are well positioned going into 2021.”

Investing in AIM – Stellar

Comments from Stephen English, who manages the Stellar AIM ISA

“Two beneficiaries are Begbies Traynor and FRP [Advisory], which are insolvency and corporate restructuring practitioners – albeit, I would say, there’s delayed gratification there because of the various schemes which have maintained a lot of businesses for the time being, but we believe insolvencies will rise next year. Tristel is a high-level disinfectant manufacturer with a proprietary chlorine dioxide formula which does actually kill the virus. They supply into the NHS and globally as well. DX Group is a courier business – everyone is now having to shop online, especially with lockdown part two, and they’ve got spare capacity when many others in the industry don’t, so they’re writing profitable business. And the last one I would flag as a winner, Volex [Group plc] is benefitting from data centres where, as everything’s going into the cloud, they make the cables that enable that transition, and they also make the high voltage cables for charging the electric cars. 

“The losers are a bit more painful to speak about, but there have been some, as you would expect – that’s what a portfolio is for. K3 Capital, which acts as a matchmaker between businesses looking to sell themselves and linking them up to buyers – they rely on transactions, which have been quite low, but they’ve made a couple of acquisitions recently and we’re pleased with how they’re looking. Quixant, which makes the hardware and software for gaming machines that you will see on casino floors – unsurprisingly their customers have been feeling the pinch as they have had to shut their floors down to their customers. IG Design, the world’s largest producer of celebrations products including gift wrap and crackers – again the shop closures have held them back this year, but again we see a longer-term recovery there. The last one that has done OK but definitely been affected is Warpaint London, which makes high-quality value make-up, and again it’s the shop closures – if the shops close it’s very hard to sell the merchandise. But what we like about them is that they’re increasingly penetrating the supermarkets and the likes of Superdrug and Boots.”


Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

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