(Alliance News) - Scottish Mortgage Investment Trust PLC on Friday said it is setting aside GBP1 billion for share buybacks over the next two years, as strong results at its portfolio companies have made them self-funding.
Scottish Mortgage is managed by Baillie Gifford & Co. It invests in growth companies globally, and its holdings are a who's who of tech stocks, including Nvidia Corp, Amazon.com Inc, Tencent Holdings Ltd, and Meta Platforms Inc. It also holds a stake in TikTok-owner ByteDance Ltd, which is currently under legislative threat in the US.
Scottish Mortgage said free cashflow from these portfolio companies has more than doubled in the past year. At the same time, the trust has paid down its own debt. Invested borrowing now represents 13% of net assets at an average interest rate cost of 3.2%.
The investment trust said it has bought back about GBP353 million in shares over the past two years and now will allocate GBP1 billion for share buybacks over the next two years.
"We remain committed to using share repurchases strategically to enhance liquidity in our shares and to seek to facilitate trading around net asset value," said Chair Justin Dowley.
Setting out the stall for Scottish Mortgage, manager Tom Slater said: "We own a portfolio of established companies achieving rapid expansion, propelled by enduring structural trends...The stock market has yet to fully recognise their progress, which creates the opportunity for us to buy the portfolio for less than its market value."
Scottish Mortgage shares were up 2.0% to 796.80 pence in London on Friday morning. The stock is up 18% over the past year and now has a market capitalisation of GBP11.16 billion.
By Tom Waite, Alliance News editor
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Scottish Mortgage (SMT)