Scottish Mortgage heading for where

[Vince]

I've reluctantly sold 15% of our holding in SMT today to release some funds for a two month trip to South America, the recent rise has been fortunate timing for us, but it still hurts to sell a portion of what has been our best investment by far.

The volatility has done this trust no harm whatsoever, it bounces back higher every time, I expect it will continue to do so over the next few years, consequently, if we have cash available to buy the dips, we won't hesitate.

Our Trustnet tracking portfolio shows an increase of 1124.39% profit since May 2015. Absolutely amazing to see what a relatively small investment can grow to in the right company.

Vince

[scrumpyjack]

The half year results are out today
https://www.investegate.co.uk/scot.mort ... 00085702R/

Dividend increased 5% to 1.52p, though I doubt many buy it for the dividend!

[Lootman]

The half year results are out today
https://www.investegate.co.uk/scot.mort ... 00085702R/

Dividend increased 5% to 1.52p, though I doubt many buy it for the dividend!

SMT has just become a ten bagger for me. Not complaining at all. I would actually prefer that they pay no dividend and retain the cash, but I guess they have to pass through 90% of dividends received and so that isn't possible unless they sell their paltry dividend payers.

[Bouleversee]

It's a pity their largest holding, Moderna, crashed by over 30% last week though SMT are saying the Covid Vaccine input is not the main reason for their investment in the company in which they still have long term confidence: https://citywire.co.uk/funds-insider/ne ... +Afternoon. (Apologies if this link doesn't work.)

I still think SMT is as good as anywhere to put one's money at present but what do I know? Only minor s.p. reaction so far, however.

[richfool]

It's a pity their largest holding, Moderna, crashed by over 30% last week though SMT are saying the Covid Vaccine input is not the main reason for their investment in the company in which they still have long term confidence: https://citywire.co.uk/funds-insider/ne ... +Afternoon. (Apologies if this link doesn't work.)

I still think SMT is as good as anywhere to put one's money at present but what do I know? Only minor s.p. reaction so far, however.

Thanks for pointing out the drop in Moderna's SP. I hadn't spotted that. Several of my other BG trusts hold Moderna, namely:-
Keystone Positive Change holds 12.84%. US Growth trust - holds 6%. Monks holds a more modest - 1.76%.

So that's a triple downside for me there, - well for the time being anyway. ***Err, correction, 4 x downside, as I hold SMT as well! ***
A point to remember if holding several trusts from the same stable.

[UncleEbenezer]

It's a pity their largest holding, Moderna, crashed by over 30% last week though SMT are saying the Covid Vaccine input is not the main reason for their investment in the company in which they still have long term confidence: https://citywire.co.uk/funds-insider/ne ... +Afternoon. (Apologies if this link doesn't work.)

I still think SMT is as good as anywhere to put one's money at present but what do I know? Only minor s.p. reaction so far, however.

An out-and-out growth stock has a valuation that reflects very high expectations. Meaning that it only takes a small disappointment to cause a big correction, like 30% or even more. As an investor, you need to be very confident or very resilient. Or delegate your decisions to SMT.

The first stock I ever bought after starting my SIPP in 2008 was ARM. When Softbank bought them in 2016 I twenty-bagged. Just wish I'd had the confidence back then to make a much bigger bet: I was indeed extremely confident of the company, but not of how markets work, so I'd assumed the high-looking price I paid encompassed a whole lot more of that growth.

[edit to add] I hadn't heard of SMT back then, but I expect they held ARM too

[Lootman]

I hadn't heard of SMT back then, but I expect they held ARM too

Quite possibly not since back then SMT was not an all-out growth vehicle but just another stodgy international generalist IT that was over-weight the UK and dividend payers. SMT has really left the rest of the pack behind by investing in disruptors and speculative issues. It really should have changed its stodgy sounding name.

The other generalists have either continued their stodgy ways (Alliance, F&C, Witan) or else succumbed altogether (Globe, TR Industrial and General, Scottish Eastern).

As for ARM, it really was the exception rather than the rule for UK companies. And even that sold out before really becoming a world beater. It is now just a part of Nvidia, which is giving its shareholders similar kinds of returns. The semiconductor sector has been red hot for a few years now, but an investor or fund with a UK focus has not benefitted.

[Bouleversee]

I bought Arm in Nov. 1999 at a price of £5.57 after adjustment following the scrip issue and I think I bought them from my husband so he could use his c.g.t. allowance. They were taken over at £17 in July 2016 so it was good profit but I was still furious that it had been allowed to happen. I will never understand why no fuss was made about it then but there was when Nvidia took it over from Softbank when both are foreign companies. We should not allow ourselves to become dependent on foreign companies for crucial supplies, the shortage of which could well wipe out gains from the Arm sale as production grinds to a halt in umpteen companies for lack of semi-conductors/chips.

I hadn't heard of SMT then either but first bought in 2018 IIRC and topped up a few times since and they are doing pretty well. However we know from the Woodford debacle you have to know what you are doing when you back developing companies and there are bound to be some who don't come up to muster.

[scrumpyjack]

I bought Arm in Nov. 1999 at a price of £5.57 after adjustment following the scrip issue and I think I bought them from my husband so he could use his c.g.t. allowance. They were taken over at £17 in July 2016 so it was good profit but I was still furious that it had been allowed to happen. I will never understand why no fuss was made about it then but there was when Nvidia took it over from Softbank when both are foreign companies. We should not allow ourselves to become dependent on foreign companies for crucial supplies, the shortage of which could well wipe out gains from the Arm sale as production grinds to a halt in umpteen companies for lack of semi-conductors/chips.

I hadn't heard of SMT then either but first bought in 2018 IIRC and topped up a few times since and they are doing pretty well. However we know from the Woodford debacle you have to know what you are doing when you back developing companies and there are bound to be some who don't come up to muster.

Quite true, I think, that HMG should have identified ARM as a crucial national asset, but in fact they don't make any chips. They design them and licence their designs to other companies who then manufacture them, a lot in Taiwan (TSMC). So the UK owning ARM would not do anything to solve the current chip shortage.

[Bouleversee]

I bought Arm in Nov. 1999 at a price of £5.57 after adjustment following the scrip issue and I think I bought them from my husband so he could use his c.g.t. allowance. They were taken over at £17 in July 2016 so it was good profit but I was still furious that it had been allowed to happen. I will never understand why no fuss was made about it then but there was when Nvidia took it over from Softbank when both are foreign companies. We should not allow ourselves to become dependent on foreign companies for crucial supplies, the shortage of which could well wipe out gains from the Arm sale as production grinds to a halt in umpteen companies for lack of semi-conductors/chips.

I hadn't heard of SMT then either but first bought in 2018 IIRC and topped up a few times since and they are doing pretty well. However we know from the Woodford debacle you have to know what you are doing when you back developing companies and there are bound to be some who don't come up to muster.

Quite true, I think, that HMG should have identified ARM as a crucial national asset, but in fact they don't make any chips. They design them and licence their designs to other companies who then manufacture them, a lot in Taiwan (TSMC). So the UK owning ARM would not do anything to solve the current chip shortage.

Quite right. I did know that at one point but had forgotten. Nevertheless, I agree they were a crucial national asset, still often referred to as a British company. If all our successful companies get taken over by foreign companies, especially private equity, what have we got left to invest in here? And I don't think we have much in the way of chip producers, have we? Why not? As I said, we should not be dependent on getting essential supplied from abroad for a number of reasons. Will someone please tip me off if there are any developments in that direction. In the meantime, SMT will be getting any spare cash I have.

[dealtn]

If all our successful companies get taken over by foreign companies, especially private equity, what have we got left to invest in here?

All the £s from those sales, and all the skills and knowledge base of our citizens/employees. (Plus tax revenues).

[Bouleversee]

If all our successful companies get taken over by foreign companies, especially private equity, what have we got left to invest in here?

All the £s from those sales, and all the skills and knowledge base of our citizens/employees. (Plus tax revenues).

???

[dealtn]

If all our successful companies get taken over by foreign companies, especially private equity, what have we got left to invest in here?

All the £s from those sales, and all the skills and knowledge base of our citizens/employees. (Plus tax revenues).

???

You think the companies are given away for nothing and all the skill sets disappear?

You asked for a "what" and that is the answer. Those £s get reinvested, and the people continue to use their skills and education in the replacement companies and industries. What do you think happens?

[UncleEbenezer]

Quite true, I think, that HMG should have identified ARM as a crucial national asset, .

From the time of the takeover, it seems that subject was topical:

Seven days ago, May said that strategic British businesses would be protected from foreign takeover. Given what's already gone, I can't think of anything more strategic than ARM. So today Hammond says this means everything's great.

ARM as an independent was at the centre of a huge ecosystem of chips. A historical analogy would be Microsoft nurturing all the clones. MS triumphed despite their actual product having many far-superior competitors, because the likes of Dell, Compaq and a host of others adopted the system they could license and made it the industry standard. And ARM's product was incomparably superior to MS's.

I recollect there was occasionally talk of a US giant buying ARM (for example Apple was oft-named in that context). My view: that would lose its core position in the ecosystem. If Apple owned ARM, Apple's competitors might fear for the future of their ecosystem and seek an alternative, leading gradually to a loss of relevance for ARM. NVidia owning ARM presents exactly the same problem. I expect it may be decades before OpenRISC truly competes with ARM, but there's momentum now (and even more so after Trump weaponised it).

[Bouleversee]

All the £s from those sales, and all the skills and knowledge base of our citizens/employees. (Plus tax revenues).

???

You think the companies are given away for nothing and all the skill sets disappear?

You asked for a "what" and that is the answer. Those £s get reinvested, and the people continue to use their skills and education in the replacement companies and industries. What do you think happens?

I must be getting even more demented than I realised as I still don't understand how your response relates to my question.. As I understood it, Arm is still functioning in the UK, presumably with many/most of the same employees, but the fruits of their skills and education are no longer benefiting me but whoever is invested in their new owners abroad instead. What I was asking was where do I put my money, not theirs, now to get a similar return? I daresay there are many other companies springing up, some will do well eventually and some will fail, but Arm was an established company which had done very well for its shareholders and looked likely to continue to do so. If you can suggest any other companies which have similar, pretty well guaranteed, prospects, I should be delighted to see your list, bearing in mind that new companies are a gamble. In the meantime, I look at my current p/fs and see lots of companies struggling to survive (which never used to be the case) and not paying me any dividends as well as losing me a chunk of my capital (in some cases a large percentage), which also never used to be the case, and I don't have too much hope of that situation improving in the near future. I shall be surprised if Unilever and Reckitt can just increase their prices to restore their profitability; I think people hard-pressed by inflation will switch to supermarkets' own brands and other struggling retailers may be wiped out by the unavailability of supplies. If any do pull themselves out of the bog and start to make serious money for me again, I shall be delighted until they get taken over by foreigners for far less than their intrinsic value.

[UncleEbenezer]

As I understood it, Arm is still functioning in the UK, presumably with many/most of the same employees, but the fruits of their skills and education are no longer benefiting me but whoever is invested in their new owners abroad instead.

ARM is now owned by NVIDIA, a NASDAQ-listed company whose shares you can own just as when they were London-listed. I strongly suspect we all do own it through SMT if not directly.

That's not to say I like what's happened (I don't). Just to answer that particular point.

I think the wider point about companies getting taken over is that people move on to the next job. Some of them create the next innovative startup.

[dealtn]

???

You think the companies are given away for nothing and all the skill sets disappear?

You asked for a "what" and that is the answer. Those £s get reinvested, and the people continue to use their skills and education in the replacement companies and industries. What do you think happens?

I must be getting even more demented than I realised as I still don't understand how your response relates to my question..

Apologies but your question came in a post about companies being national assets and regret they were allowed to be sold. It wasn't clear you then meant it to be about your individual shareholding and where to reinvest it.

What I was asking was where do I put my money, not theirs, now to get a similar return? ... If you can suggest any other companies which have similar, pretty well guaranteed, prospects, I should be delighted to see your list, bearing in mind that new companies are a gamble.

No list of companies exists that provide similar return with any guarantee I'm afraid.

In the meantime, I look at my current p/fs and see lots of companies struggling to survive (which never used to be the case) and not paying me any dividends as well as losing me a chunk of my capital (in some cases a large percentage), which also never used to be the case, and I don't have too much hope of that situation improving in the near future.

Not really the place to reply, but if you care to post your holdings here

viewforum.php?f=56

Portfolio Management & Review

I will gladly comment, as I am sure others would too.

Alternatively start a discussion here

viewforum.php?f=8

Investment Strategies

as it sounds like you might have too undiversified a strategy if you are only seeing poor income and negative capital returns. You might be unlucky but it's possible your holdings are too similar and reflect a poorly performing sub-sector of the available investment options, or a non-performing strategy.

[airbus330]

SMT having a fun day today. -4.59% as of this minute. Wonder what has spooked people or just it got too frothy?

[Dod101]

SMT having a fun day today. -4.59% as of this minute. Wonder what has spooked people or just it got too frothy?

Wish I knew, down below £14 today. Anyway we all know it is a bit volatile.

Dod

[scrumpyjack]

SMT having a fun day today. -4.59% as of this minute. Wonder what has spooked people or just it got too frothy?

Wish I knew, down below £14 today. Anyway we all know it is a bit volatile.

Dod

They are still slightly above NAV but have just about lost the premium they had built up again. The Nasdaq is down another 2.4% today.
One should really talk about the price changes of their main holdings rather than of SMT as if it exists in a vacuum. Tesla, Meituan and Tencent all down sharply today. Apparently the US jobs figures were well below expectations today so that has pushed the market down, particularly tech shares.