I’ve long wished that SpaceX was available as a stock to buy. Alas, the space exploration giant prefers to remain private as it works towards making humans a multi-planetary species.
However, UK investors can get exposure to SpaceX through investment trusts. One that I think is worth considering for a growth portfolio is Schiehallion Fund (LSE: MNTN), whose top holding is SpaceX.
The quirky-sounding fund is named after the Schiehallion mountain in Scotland and currently has a $922m market-cap. It’s managed by Baillie Gifford, the asset manager best known for running Scottish Mortgage Investment Trust.
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Unlike other investment trusts, Schiehallion aims for capital growth by investing in later-stage private businesses that it considers to have “transformational growth” prospects and the potential to become publicly traded. In other words, not start-ups in basements. A handful of holdings have already gone public.
While the share price has risen 34% over the past two years, it remains 70% off a peak reached in late 2021.
Strong year
On 26 March, the trust released solid results for the year to 31 January. The net asset value (NAV) return was 12.9%, while the share price increased 51%.
In the period, the share price discount to NAV narrowed from 39.6% to 19.2%. Perhaps the 5.2m shares it bought back at a cost of $4.2m helped (the fund is denominated in US dollars).
Schiehallion enjoyed a very strong final quarter of its financial year. This was driven in part by SpaceX’s valuation reaching a mammoth $350bn, making it the most valuable private company in the world.
It first invested in SpaceX in 2019, meaning it has generated a more than six times return over that period. When I hear that, I think that’s a 500%+ return I’ve missed out by not being able to buy SpaceX shares myself!
Other private contributors to performance included Bending Spoons (+89%), which is an Italian consumer app acquirer, and Chinese TikTok owner ByteDance (+33%). I’m not familiar with the former, while everyone has heard of the latter, for better or worse.
Among public holdings, there were strong share price increases from Affirm, Wise, and Warby Parker.
The top 10 holdings have been growing revenue at 42% on average, with a healthy 58% gross margin profile. Roughly 40% of the portfolio is profitable on an EBITDA basis.
Top 10 holdings (January 2025)
| Company | % of net assets | Description |
|---|---|---|
| SpaceX | 9.4% | Rockets and Starlink satellite internet constellation. |
| Bending Spoons | 8.1% | Acquirer of digital consumer applications. |
| ByteDance | 6.2% | Owner of TikTok. |
| Wise | 6.1% | International money transfer services. |
| Affirm | 5.9% | Consumer loans. |
| Tempus AI | 3.4% | AI-based precision medicine. |
| Stripe | 2.9% | Global payments processing company. |
| Databricks | 2.8% | Data analytics platform. |
| Wayve Technologies | 2.6% | Develops software for autonomous vehicles. |
| Warby Parker | 2.6% | Corrective eyewear retailer. |
Risk
Now, it wasn’t all positive. One holding, Swedish battery maker Northvolt has gone under. Another, German real estate agency McMakler is also facing great difficulties.
Both holdings saw their valuations almost fully written down, which highlights the inherent risks of investing in developing growth companies. That said, more than 80% of the private firms within the portfolio have a cash runway of more than two years. That’s encouraging to know.
Nevertheless, Schiehallion is only suitable for risk-tolerant, long-term investors.
Foolish takeaway
Since the end of February, the share price has plunged 25% to $0.89 (69p). This means the NAV discount has widened to 31%, which I think offers a potentially attractive entry point.
Looking forward, Schiehallion’s managers are excited at the opportunities out there. And they say SpaceX has “arguably one of the most robust competitive advantages we have ever seen“.
Finally, the ongoing charge is 0.92%, which is reasonable.
