Will the soaring Tesla stock price kickstart Scottish Mortgage shares?

2023 has definitely provided a lift to Tesla share price, which is up 65% so far in January. As one of the top 10 Holdings in the portfolio of Scottish Mortgage Investment Trust (LSE: SMT), which should be good news for Scottish Mortgage shares.

Could this be the start of a wider turnaround for trust stocks – and could now be a smart time to buy my portfolio?

Grab the key

As an investment trust, Scottish Mortgage owns shares in dozens of different companies. This means that buying offers a way to diversify my portfolio.

At one point, Tesla was the largest shareholder in Scotland Mortgage’s portfolio. Indeed, the position reached such a size, due to the rising price of Tesla shares, that Scottish Mortgage reduced its stake in the car manufacturer.

Even so, it remained the seventh largest shareholder in the trust’s portfolio at the end of last month, accounting for 3.2%. So even Tesla’s very strong performance will have only a limited positive impact on the investment trust’s share price.

The bigger picture

Indeed, despite the boost provided by Tesla’s rising share price, Scottish Mortgage shares were down 5% of the board at the start of this month. Over the past year, they have lost 30% of their value.

With a portfolio that contains many technology companies, Scottish Mortgage has seen its share price suffer as many technology stocks fall from their highs. Despite the rise this month, for example, Tesla’s stock price is still 43% below last year’s level.

What’s next?

The global economy remains in treacherous waters. However, like Tesla’s strong performance in January, some investors are becoming more optimistic about what’s to come.

That could lead to a rally in some shares, perhaps boosting the value of Scottish Mortgage’s portfolio. That could help raise the stock price.

However, for now, I see Tesla as an individual stock that has done well lately rather than necessarily as a sign that the broader stock market is about to take a dramatic turn off.

I want to buy it

I don’t think that’s very important to the Scottish Mortgage stock investment case, though.

As a long-term investor, I would never buy an investment trust based on the short-term movement of just one stock it owns. Rather, I will focus on the overall investment strategy of the fund manager – and its value.

The Edinburgh-based trust has a long-term track record. While the recent performance of Scottish Mortgage Shares has been poor, the approach aimed at investing in compelling growth stories at an early stage continues to attract me.

The current share price offers what I think is an attractive entry point. There is a risk that if tech stocks stop or start to fall again, there could be more price turmoil. However, if I had the money to invest, I would buy into Scottish Mortgage.