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Scottish Mortgage Investment Trust (LSE: SMT) is one of the most popular and widely traded stocks on the London market. Indeed, there are usually between five UK retail investors buying and selling each week.
Unfortunately, Scottish Mortgage shareholders have taken a beating since the US tech bubble burst at the end of 2021.
Scottish, but not a mortgage
Despite its name, Scottish Mortgage does not invest in home loans. However, the investment trust – founded in 1909 – is the UK’s most popular global technology fund.
The trust – run by Edinburgh-based investment group Baillie Gifford – invests in growth and disruptive technology companies driven by innovation. Today, its total assets are almost £13.4bn, with its major shareholdings including biotech businesses Modern and automaker Elon Musk Tesla.
More than half (54.2%) of the trust’s assets are in North America, with around a quarter (24.4%) invested in European companies. Invest in private (52 holdings, 29.9% of assets) and public (47 holdings, 70.1% of assets) businesses.
The holdings of the top 30 trusts account for 75.8% of the total portfolio.
I have been a big bear on Scottish Mortgage shares
For at least 18 months, I have been 100% bearish (negative) on Scottish Mortgage shares. Indeed, when the stock went up in November 2021, I repeatedly warned that it was a huge bubble.
As a leading technology investor, Scottish Mortgage shares fell as the US tech bubble burst in late 2021. On 5 November 2021, the stock hit a record intra-day high of 1,568.5p.
As I write, the stock trades at 673.31p, down 57.1% from its peak. Here’s how it’s done over seven periods:
| One day | 0.0% |
| Five days | +2.2% |
| One month | -5.6% |
| Year to date | -6.5% |
| six months | -13.9% |
| A year | -34.2% |
| five years | +56.7% |
Although Scottish Mortgage’s shares have failed since the end of 2021, they are still up by more than half in five years. But this is all because of the extraordinary returns during the 2019/21 bull market.
Therefore, almost everyone who bought the stock since May 2020 will lose today. It’s also worth noting that the stock’s 52-week high was exactly one year ago, when the stock hit 1.058p on March 31, 2022.
That said, this is it FTSE 100 The share has recently rebounded 5% from its 52-week low of 641.54p on Friday (March 28).
I’m a bit bullish right now
After a gloomy 18 months on Scottish Mortgage shares, I’m adding it to my buy list this week. Indeed, if I had spare cash, I would buy a small stake in this trust today.
Why my change of heart? Only because the stock is now trading at a discount of almost a fifth (-19.9%) to its net asset value (NAV) of 841.08p. For years, this trust’s stock has traded at a steep premium to its underlying NAV, so this change sends a value signal to me.
In addition, annual management fees of 0.32% are lower than other leading technology funds. However, a dividend yield of 0.5% per year is nothing special.
In summary, I have suggested to my husband that we buy some Scottish Mortgage shares for our family portfolio. Also, with so many stocks already in the pot, it’s a good idea to add new growth/technology stocks for balance and ballast!
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