Once upon a time, Scottish Mortgage Investment Trust (LSE: SMT) shares were the hottest stock on the London market. Alas, 2020-21 was years ago and this star stock has since turned into a dog. But surely this tanker must turn around at some point?
A top investment trust
Although still managed in Edinburgh, Scottish Mortgage has precious little to do with Scotland and mortgages. In fact, this 124-year-old investment trust is among the UK’s top global technology funds.
The trust — founded and still managed today by investment group Baillie Gifford — invests in high-growth and disruptive-technology companies driven by innovation.
Right now, its total assets (before borrowings) exceed £13.3bn. Its top three shareholdings by size are biotech business Moderna, Elon Musk’s electric carmaker Tesla, and leading chipmaker ASML.
Though more than half of the trust’s assets are invested in North America, it also invests in public and private businesses in Europe, Asia and elsewhere. In total, it has stakes in 99 different companies worldwide.
From boom to bust
As one of the most popular UK shares, Scottish Mortgage stock is very actively traded. But anyone buying into this trust since 2020 is probably bitterly disappointed.
At the peak of the US tech bubble in late 2021, this FTSE 100 share hit a record intra-day high of 1,568.5p on 5 November 2021. Alas, it has made a bonfire of investors’ money ever since.
As I write on Monday afternoon, the Scottish Mortgage share price stands at 635.8p, having hit a 52-week low of 634.6p moments ago. Thus, these shares have fallen by 59.5% in under 18 months. Yikes.
Here’s how this Footsie share has performed over seven different periods:
| One day | -1.4% |
| Five days | -4.4% |
| One month | -2.3% |
| Year to date | -12.2% |
| Six months | -17.1% |
| One year | -28.8% |
| Five years | +34.0% |
Looking at my table, I can see no upwards momentum for Scottish Mortgage shares over periods ranging from one day to one year. Then again, the stock is up more than a third over five years, easily beating the FTSE 100’s 5.5% gain over this period. The above figures all exclude cash dividends.
I’m now bullish on SMT
From 2020 until last month, I was very negative — or bearish as it’s known — on Scottish Mortgage shares. But as a natural contrarian investor, I like to go against the herd. Hence, I actively enjoy buying shares after steep price falls.
With the stock having fallen as far as it has, I’m convinced that there must be some value hidden away inside the trust. Of course, I could be wrong and the shares could keep on falling. But today, with the share trades at a discount of 21.5% to the trust’s net asset value per share, it’s a bit like buying £1 coins for 78.5p.
With this former growth stock now down in the dumps, I’ve added it to my watchlist. To be honest, I’d buy it today without hesitation — if I had enough cash to spare, that is.
Meanwhile, I’ll keep a close eye on Scottish Mortgage shares for the time being!
