At the end of March, Scottish Mortgage Investment Trust (LSE: SMT) shares started to tick up a bit.
The price is still up more than 50% over five years, though. But has the slump come to an end?
It’s down to the fall in US Nasdaq growth stocks held by the investment trust. Tesla dropped from its highs of 2021, and Moderna fell from peak values after a boost from Covid vaccines.
Silicon chip specialist ASML also fell from its 2021 highs. In all, it looks like the growth stock bubble has burst. But are there any signs that the crash might be over? I think I see some.
Discount
But first, I see one good reason to view Scottish Mortgage shares as cheap now. There’s more than just the prices of the stocks the trust holds. I’m talking about the discount.
The trust has fallen to a discount of 20% now. That means the shares trade for 20% less than the value of its assets. Does the chance of buying US growth shares at 20% off sound good?
It does to me. But it makes me fear that UK investors think there could be worse to come before these stocks start to rise again.
Changes
And that’s where I see changes. When I look at the top stocks held by Scottish Mortgage, I things look just a bit better now.
Tesla stock has almost doubled from the lows it reached at the end of 2022.
Moderna has had more ups and downs. But it’s up around 30% since last year’s low. And it has moved back up after a new wobble in early 2023.
Some of those gains will boost the net asset value for Scottish Mortgage shares. The trust’s price has itself ticked up in the past week or so, so that’s helped hold the discount where it is.
Settling?
We’ll need, I think, to see the volatility of Nasdaq stocks start to settle. And, with a bit of luck, prices could start to rise again. But, I hope, in a more sustained manner this time.
I also want to see sentiment improve. I expect the mood will swing back towards growth shares and behind Scottish Mortgage shares some time. But with so many in the City still struck with fear and thinking of safety, it could take a fair while yet.
But if and when the mood swings, we should see the discount start to fall. And that, I think, could be the sign that a Scottish Mortgage share price recovery might be on the cards.
Timing
Now, I must stress that I don’t like the idea of trying to time the market. And US growth stocks might well hit a new dip this year. So I will not try to pick the bottom.
I do, though, think that any fall in the discount could be a sign that Scottish Mortgage shares might be near the end of their super cheap spell.
But while the discount is big, the shares stay on my buy list.
