Scottish Mortgage Investment Trust (LSE:SMT) shares started the year on a downward track. But its fortunes have been improving, and today, the share price jumped 4% after some positive earnings results from Apple and Amazon.
I’ve already bought some Scottish Mortgage stock for my pension, but maybe I’m too late to add it to my ISA. Let’s take a closer look.
What is Scottish Mortgage?
Scottish Mortgage is a publicly traded investment trust and its share price reflects the value of the stock that it owns.
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The trust is heavily weighted in growth stocks, notably those listed in the US and China, as well as unlisted companies. It owns shares in a number of household names, including biotech Moderna, EV maker Tesla, and Elon Musk’s SpaceX.
It had been one of the most successful funds in recent years. However, it lost its position as the UK’s largest investment trust in market-cap terms this year as the value of growth stocks collapsed.
The growth stock collapse was reflected in Scottish Mortgage’s share price, which fell from highs around 1,500p per share in November to less than 700p in June.
Today’s surge
Scottish Mortgage surged on Friday after tech giants Apple and Amazon reported very positive results. Amazon is Scottish Mortgage’s seventh-largest holding. Scottish Mortgage does not own Apple shares, but the iPhone maker’s better-than-expected earnings have given a boost to the sector as a whole.
Amazon sales were up 7% in three months to June. It marks one of slowest growth periods in the company’s history but still better than expected. Apple registered record Q3 revenue of $83bn despite concerns about flagging consumer confidence.
Would I buy Scottish Mortgage shares?
Scottish Mortgage’s biggest holdings all tanked at the beginning of 2022. Moderna, Illumina, ASML Holding, Tesla, and Tencent are the trust’s five biggest holdings, and they’re all down considerably over the past year, with the exception of Tesla. These companies collectively represent around 30% of the portfolio.
But now valuations are starting to look more attractive and we’ve seen growth and tech stocks make gains over the past two months. I actually bought Scottish Mortgage shares at 700p. For me, it seemed like a natural turning point as valuations fell.
But I’m still bullish on Scottish Mortgage. Not necessarily because I see a huge amount of upside for the biggest holdings, but because Scottish Mortgage’s stock pickers have an uncanny ability to choose the next generation of big winners.
It could be the case that the next big winners are already sitting in the portfolio, and we just don’t know who they are yet. Let’s face it, most of us hadn’t heard of Moderna before the pandemic.
There are also smaller holdings like NIO, which I’m quite excited about. The Chinese EV maker is on an impressive growth curve and could, one day, rival Tesla. China is also pushing EVs as it seeks to take pollution out of its cities — although massive coal power plants still create pollution outside city boundaries.
So, at 866p, I’d buy Scottish Mortgage stock for my ISA.
