Scottish Mortgage Investment Trust (LSE: SMT) shares have crashed hard since peaking in November 2021, at the height of the US tech bubble. After plunging over 17 months, is there finally light at the end of the tunnel for stunned shareholders?
A staggering slump
As I write, Scottish Mortgage stock stands at 652.94p, up 1.6% since Wednesday’s close. However, the shares have been a complete lemon for ages, as the following table shows:
| Five days | -3.7% |
| One month | -9.2% |
| Year to date | -9.7% |
| Six months | -14.0% |
| One year | -33.3% |
Over all five periods ranging from five days to one year, this stock has destroyed value. Even worse, it’s down by exactly a third in one year. Over that time, the FTSE 100 index is up 2% (excluding dividends).
In short, Scottish Mortgage shares have been an utter dog in 2022/23. Still, at least they have risen by more than half (+51.4%) in the past half-decade.
Sadly, almost all shareholders who bought into this trust pretty much anytime since May 2020 will have lost money — on paper, at least. Yikes.
I’ve been a big bear of Scottish Mortgage shares
Since 2020/21, I have been very bearish (negative) towards this FTSE 100 stock. That’s when it was blown up into an almighty bubble during the tech boom of 2020/21. When the ‘tech wreck’ arrived in late 2021, this stock imploded.
I’m very relieved never to have invested in this £13.4bn trust’s shares to date. But after such gut-wrenching falls, I suspect there could be hidden value in this former growth stock.
When the facts change, I change my mind
The above phrase is often attributed to eminent British economist John Maynard Keynes (and also Sir Winston Churchill). It reminds me that there’s nothing wrong with reversing long-held beliefs when the time is right.
After brutal falls for this popular and widely held stock, I’ve moved into the bull camp for Scottish Mortgage shares. Not least because the trust’s shares now trade at a discount of more than a fifth (-21.4%) to their underlying asset value. That’s akin to buying £100 of shares for £78.60.
Also, I feel that my family portfolio would benefit from higher exposure to global growth and tech stocks. So why not get this investment on the cheap via the UK’s most popular global technology fund?
From dog to star?
If Scottish Mortgage shares keep falling, then they could become a screaming buy at some point. But I’m not skilled, smart, or lucky enough to know when this will happen. Then again, same for everyone else, right?
In summary, I think current price levels offer an opportunity to board the Scottish Mortgage bus at reasonable value. Therefore, my wife and I intend to buy some of this sinking stock when we have enough cash to spare!