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How it started:
Our philosophy
Our purpose is simple. Maximise total returns over the long term. To do that, we aim to own the world’s most exceptional public and private growth companies. And we limit fees so that shareholders keep more of any returns generated.
Invest in progress
The returns we aim to produce for shareholders will appeal to many, but the road travelled in achieving them may not. Investing in companies at the forefront of structural change means share price peaks and troughs are inevitable, for both the companies we own and the trust itself.
But in our experience, share prices follow fundamentals and progress always prevails. We ask that owners of Scottish Mortgage share in our long-time horizons, our commitment to investing in progress, and be aware that returns are not delivered in a straight line.
Find the few
What happens to the average company is not important to us. We believe it’s a small number of exceptional growth companies that will drive returns. We aim to find them and own them for long periods of time.
The businesses we seek have long growth runways ahead of them. They address large and growing opportunities. They possess an enduring competitive advantage, disrupting their respective industries or even creating new ones. Many are founder-led and have a cultural edge that will tilt the chances of success in their favour.
Scottish Mortgage makes available at least £1 billion for buybacks over the next two years.
Scottish Mortgage’s public and private portfolio is delivering strong operational results, evidenced in part by free cashflow from the portfolio companies having more than doubled over the past year. Collectively, portfolio companies have adapted to a higher cost of capital and are funding their future growth. Against this backdrop and having further strengthened the Company’s balance sheet, the Board now intends to take more concerted action to address the discount to net asset value at which the Company’s shares continue to trade.
According to Jefferies, this is the largest ever buyback programme by a UK investment trust, with £1bn representing 9 per cent of the Scottish Mortgage Investment Trust’s shares.
Attempting to address the yawing gap between SMIT’s 781p share price and its 927p net asset value is understandable, but it is a very weird use of money by an investment vehicle that very loudly touts how it aims to “identify, own and support the world’s most exceptional growth companies”. Which apparently now includes itself.
Jefferies notes that SMIT has “headroom” to do so, after having deleveraged and improved performance after the annus horribilis of 2022, and, “importantly, the programme likely reflects the board’s confidence in the valuations of the private company holdings”.
Perhaps. But if the Baillie Gifford-managed investment trust was so concerned about share price-NAV discounts, perhaps the better move would have been to mark down the value of its huge private company holdings to something closer to what the market clearly thinks they’re worth?
Or simply not have ploughed almost a third of its assets into private companies, much of it at the end of one of the longest and strongest bull market in history?
