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The way I see it, with listed shares the share price is based on the last trade, private equity is not actively traded so they say it is difficult to value, but by selling some of the holding you get a price per share that you can use to value the rest of the holding.
SMT, Elliot and us, we are all in this to make money, if they make money then so do we, they are professionals and I am a private investor, I have to trust that they know a lot more than I do about how these things work. I'm happy with the way things are going, as long as the world keeps turning and in a few months time we get interest rate cuts here and in the US then the upward trend should continue, Moderna might pick up later in the year, they have some good stuff coming through.
I've been reading many articles about Elliot, they seem to know what they are doing, they have bought over five percent of SMT the UK's largest investment trust, that's a significant investment and they will be expecting to make a good profit. One thing they mention is they think SMT have undervalued the private equity, that makes sense to me, over the past year the pundits have been negative about the private equity saying it is risky, hard to value and up to the thirty percent limit, it's possible SMT have undervalued it to keep below thirty percent, Elliot may have done their own valuations and think they should be higher. I'm happy how things are going, many investment trusts are trading at large discounts, but Elliot chose SMT, and they will have had good reason.
The impression I get is that Elliot think SMT are undervaluing the private holdings, so by selling some of the space x holding it creates a definite valuation for the remaining space x that they still hold, maybe Elliot know that if SMT do this for some of the other private equity as well it will give them definite valuations that can then effect the NAV.
SMT would be top of the list if it was near it's high like the three above it on the list, SMT would be almost double it's present value.
The NAV is rising nicely, the share price is cheap at the moment.
The sellers are selling to people (and automated trading programs) who think it's the right time to buy.
It's good to have a plan
Let's see what happens this year. When the FED or even BOE make the first interest rate cut, and one of the private companies ipo, which should happen this year, then some of the pundits and analysts who were telling us to sell in the low 600s will be advising us to buy SMT again. As for the world in general, I am hoping for peace to prevail, that benefits everyone.
Last year Tesla went down to around 100, then went up to 300, it's down to around 200 now, these kind of price swings are normal for the high growth companies that SMT invest in. NVDA and ASML are flying high at the moment, but they too have similar price swings. Wait for the stars to align and a higher percentage of the holdings will be flying high, then SMT will fly high again for a while, it's what it does, over and over and over again.
1200 is my next target, timescale depends on outside forces, but it will get there and beyond, I'm glad to be a holder right now.
New yearly high again today
SMT made a new yearly high today, the NAV is rising, the discount is narrowing, the price has broken out above a rising 50 day and 200 day moving average.
When it comes to investing I just use common sense and probabilities, there's lots of information out there thats easily accessible with the internet. We all know that rising inflation and rising interest rates are bad for growth stocks, looking at the news it appears that inflation is falling, interest rates will probably also start falling, probably sometime next year, this will be a positive thing for growth stocks. For SMT some IPO's of the private equity would be good, these have been mentioned in recent news, and may start to happen next year. Its hard to buy stocks when they are in the doldrums, it seems easier when the share price is in an uptrend and everyone is singing its praises, both ways work. If you buy now you may have to wait, but you are nearer to the bottom, or you can wait for a good uptrend and join in then, people make money both ways.
I think this is a good buy point for SMT and a lot of other trusts and individual stocks, I've sold BP that has stayed up and bought more SMT, I feel there's more upside potential for SMT from this level.
It's all about time frames, over 10 years SMT is one of the best performing trusts, over 5 years it may not look so good, but even at this low point it has still out performed so called safer trusts like CTY. People will now say what about the past 3 years or 1 year performance, well SMT management say they aim to create value over 5+ years, over the past 10 years the share price has roughly doubled every 5 years, for that performance to continue the share price will need to double from where it is today over the next five years, my money is on it.
I read an article about NVDA, if you had invested $10,000 when it had it's IPO in 1999 you would now have over $25,000,000, that's a massive increase, but interestingly during that time the share price dropped over 50% on twelve occasions, and on two occasions it dropped over 90% , these are the type of stocks you are investing in with SMT. According to Scottish mortgage this drawdown we are in now doesn't even make their top five for SMT, it's all been seen before and worse.
Looking good
It's a strange thing, if you think that this is the right time to sell SMT shares you will be selling them to someone who thinks it's the right time to buy SMT shares.
I think investment trusts in general are out of favour at the moment, looking at some that I have owned over the last few years, CTY, TMPL, BCPT among others, things will change, August can be a slow month.