What’s going on with the Scottish Mortgage share price now?

The Scottish Mortgage share price is up 30% over the past 12 months, outperforming the index. Our writer explains why it’s performing so well.

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The Scottish Mortgage Investment Trust (LSE:SMT) share price has recovered from its post-pandemic lows. In fact, up 30.5%, it’s among the top-performing stocks on the FTSE 100 over the past 12 months.

So why has it performed so well and where might it go next?

It’s always important to compare the Scottish Mortgage share price with the company’s net asset value (NAV) per share.

Around a year ago, the shares were trading at a discount of around 20% to the NAV per share.

In other words, analysts said that the asset value of each share was around £8.50, but the stock was changing hands for just £6.50.

Now that discount has fallen. The shares are trading with a discount of 8.99% to the NAV, which currently sits around £9.91.

One reason for this is simply improving sentiment. Another is improving forecasts for the sectors in which the Scottish Mortgage Investment Trust invests.

The other reason for the improving share price is also indicated by the NAV. It has grown by over 20% in a year because the value of the trust’s investments has surged.

The trust has dozens of holdings, but looking at the top ones, we can see where some of this growth has come from.

Holding no.StockOne-year performance
1Nvidia209%
2Moderna15.2%
3ASML40%
4Mercadolibre30.2%
5Amazon45.5%
6SpaceXNot publicly traded
7PDD Holdings92.2%
8Ferrari34.8%
9Tesla-28.9%
10NorthvoltNot publicly traded

Of course, the caveat to this data is that these stocks are the largest holdings partly because of their strong performances over the past 12 months.

Should I buy more stock?

I already hold Scottish Mortgage in my pension and it’s performing rather well to date. But should I buy more?

Well, it’s hard to assess the portfolio as a whole. But when we look at the consensus of analysts covering the top 10 stocks in it, we can see a broadly positive trend.

Holding noStockConsensus ratingPrice target vs current price
1NvidiaStrong Buy-2.1%
2ModernaModerate Buy0.4%
3ASMLStrong Buy6.7%
4MercadolibreStrong Buy20.9%
5AmazonStrong Buy20.9%
6SpaceXNot publicly traded
7PDD HoldingsStrong Buy45%
8FerrariModerate Buy4%
9TeslaHold-6.2%
10NorthvoltNot publicly traded

This is all very positive, but there are several important things to highlight here.

First, Scottish Mortgage has traditionally been excellent at finding the next big thing to invest in before any of us have even heard of it. So that’s another plus.

However, one concern is that the Scottish Mortgage no longer has James Anderson at the helm. A change of management may have concerned some investors over the past year. Only time will tell if it performs as well without him.

And finally, the NAV we see above includes the estimated value of a number of unlisted stocks. As unlisted stocks don’t have a market value, we have to take the trust’s word for it.

Unlisted companies also publish much less data. So it’s really hard for us to make up our minds as to whether these parts of the portfolio are something to cheer about or worry about.

However, I’m rather bullish on Scottish Mortgage. I see the long-term direction as upwards and I’m considering buying more given supportive trends within growth sectors like AI and biotech.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Fox has positions in Nvidia and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended ASML, Amazon, MercadoLibre, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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