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?
Two supportive trends
It’s always important to compare the Scottish Mortgage share price with the company’s net asset value (NAV) per share.
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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. | Stock | One-year performance |
| 1 | Nvidia | 209% |
| 2 | Moderna | 15.2% |
| 3 | ASML | 40% |
| 4 | Mercadolibre | 30.2% |
| 5 | Amazon | 45.5% |
| 6 | SpaceX | Not publicly traded |
| 7 | PDD Holdings | 92.2% |
| 8 | Ferrari | 34.8% |
| 9 | Tesla | -28.9% |
| 10 | Northvolt | Not 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 no | Stock | Consensus rating | Price target vs current price |
| 1 | Nvidia | Strong Buy | -2.1% |
| 2 | Moderna | Moderate Buy | 0.4% |
| 3 | ASML | Strong Buy | 6.7% |
| 4 | Mercadolibre | Strong Buy | 20.9% |
| 5 | Amazon | Strong Buy | 20.9% |
| 6 | SpaceX | Not publicly traded | |
| 7 | PDD Holdings | Strong Buy | 45% |
| 8 | Ferrari | Moderate Buy | 4% |
| 9 | Tesla | Hold | -6.2% |
| 10 | Northvolt | Not 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.
