Member Info for fela96

Yeah. Bytedance is probably my least favourite holding here too. If TikTok is the future then I don't want to live it. I want it to go to zero.

The average TikTok user has an attention span less than that of a goldfish.

I don't think Tesla ever reached anything like 20% of the portfolio. I hope they don't keep SpaceX that high by choice and don't expect they would.

If that became standard practice, then the PE section of the portfolio would have to be assigned a zero, right? Since it's not liquid and therefore can't be sold at any known price. And any holding where SMT is a significant shareholder would have to be assigned a discount, since an attempt to sell would tank the price... and all founder billionaires should have their paper net worth decimated, since were they to liquidate their portfolio, such would be the outcome on the stock price...

If managers here start making up numbers for the NAV based on "feels", then I'd be of a mind to sell this going forwards.

I expect a NAV (upwards) correction going forwards, accompanied by a sharp widening of the discount. We shall see...

I'm of a different view - if SMT is subject to a lockup period and can't immediately rebalance out of SpaceX holdings, then I imagine the discount here could widen quite a lot over the next few weeks/months as SpaceX nominally represents an increasing part of the NAV but there's no way to realise that price. In fact I see the risk here over the short/medium term as quite high. SpaceX crashing would have downside, and the limited float being squeezed would have limited upside due to the lockup period.

If they do manage to raise some cash I don't imagine it would be held - it's not really in the remit of a trust like this to hold cash.

The main risks I see with the AI boom are hitting a wall with power delivery. I don't really see a risk of not being able to make money from the buildout capex, assuming compute supply can meet demand. The tools are so transformational, to so many industries, that I believe companies like Anthropic could 10x the price of their products, and still be compute-constrained, not demand-constrained. E.g. in software engineering, Claude is now a tool as essential as a code editor. It's not going away.

I am super bullish on Anthropic in particular, and am glad this trust holds it. SpaceX seems more risky, and the bet seems to be that SpaceX unlocks a cheap AI-power source - the sun - through (1) lowering cost per mass to orbit (with Starship), and (2) increasing watts-per-kg (with servers and power delivery in orbit). I believe SpaceX will look irrationally priced for years, while solving this problem looks like a possibility, because if it does, the IPO price looks cheap. It would easily be the most valuable company in the world under this optimistic scenario.

If SpaceX solves those problems, or the cost of AI delivery is reduced some other way, then I think the AI boom is only just getting started. If that problem doesn't get solved, then eventually AI tools will become too expensive to ever be profitable, and the buildout will collapse, resulting in a global recession most likely. I hope that outcome doesn't occur but I think the risk is high.

Anyway, they seem to have increased NAV in line with expected market price: https://quoteddata.com/2026/06/baillie-gifford-lifts-spacex-valuation-to-1-6trn-raising-scottish-mortgage-trusts-stake-to-21-or-3-5bn/

To distil my last point: it's the managers' job to accurately report what the fund's holdings are worth - not what they think they are worth. It is the market's job to judge whether that value is accurate or not (in the form of a premium or discount). Agree?

Makes sense. Presumably if they were dead set on the idea it's overvalued, they could short the float. Or maybe that's against the rules too...

I just don't really see what would be in it for the managers here to pretend that the holding is worth less than what the actual market values it at. You can argue the valuation is artificial, but you could do that for a lot of stock valuations; people did it for Tesla IIRC ("it's only that high because it entered the S&P 500" etc...). Retaining the previous valuation in NAV would just say to me that the managers don't have confidence in the IPO market or stock market in general, which wouldn't inspire much confidence in being invested in said market. In any case, it's investors on LSE which value what they consider SMT to actually be worth, so like I've said already I think it would just be seen as an attempt to massage the premium / discount for reasons other than increasing shareholder value.

Why would the managers hold SpaceX if the float price on the open market is significantly higher than what they consider fair value? Why not just sell as much of their holding as possible into that market?

If/when SpaceX is public then the ticker price is surely the one they use in NAV calculation. Otherwise it would be seen as a fake premium to justify share sales, no?

Not sure I understand the logic of "top-slicing". If I buy at price X, and the share reaches price Y, then whether I think it is a good investment at price Y or not should be independent of what X is, right? I understand rebalancing (if the holding has become too concentrated), but if you think the current price is a bad entry, then you should sell all of it, right?

For what it's worth, this share has not recovered very well from 2021. Over 5 years its performance is pretty atrocious: +25.6%, compared to +133.71% for EQQQ, or +182.84% for ATT. Even S&P 500 (CSP1) is up +100.63% over this period.

Shockingly it even trails the FTSE 100 (up +46.75%) over five years.

SMT did have a massive peak 5 years ago, but so did ATT. I still believe in it and it's my largest holding despite the above. But I guess the point I'm making is that to call the current price a "top" is a bit pessimistic. It's only just regained its previous ATH.

What you're suggesting seems like a directional bet (IPO fails and you make a loss), rather than a hedge. It might work or it might not. But if you want to make a short term bet I'd say there are better ways to do it. SMT is meant to be held for a long time for the real value to accrue.

Andy, are you saying PCT is worth 6x now what it was in November 2021?

I find the chicken licken doom mongering about another Trump presidency kind of incredible. For the four years that Trump was president, there were no major wars. In the three years since Biden replaced him there have been two. Now I'm not saying that you can simplistically attribute cause and effect here. I'm far from being a fan of the guy. But purely on a factual basis, the world under Trump was a more peaceful place (and therefore a better investment environment). Volatility in global markets was also virtually zero during his presidency, except for a brief spell in 2018 and of course the covid crash, neither of which had anything to do with his policies.

Walp, I understand that people make mistakes and that's fine. But that's why it's good to call out when you believe someone has said something which actually doesn't in any way imply what they think it implies. Or implies the opposite of what they think it implies. That is useful information which better informs the discussion.

The only reason any of this devolved is because of your and LLL's reaction to a simple calling out of a mistake. There was no antagonism on my part. I hope others reading this can see that.

Walp, it is hardly picking something to death if you call out a statement which is designed to persuade people of something but which in actual fact means nothing.

It is hardly picking something to death if you call out that a statement intended to convey a point, actually draws the opposite conclusion on a slightly deeper analysis.

As I say, it's the inflation rate as well as comparable indexes which you need to take into account. You could have made a lot more money, more cheaply and easily, with less volatility, elsewhere. So yes, I would consider SMT's performance so far shoddy. But again, at risk of repeating myself, I am not trying to do down SMT's prospects and believe this represents a great entry point.

That wasn't the body of my argument, no. If you look down to what I originally replied to, it was a statement from LLL saying he was up "more than double" in the period he'd held SMT. My point here is that that statement alone bears absolutely no weight either for or against SMT as an investment. Other people reading that can draw no conclusions on whether SMT has done well for LLL, let alone would do well for themselves.

Furthermore, my opinion is that SMT doubling for LLL means it has been a crappy investment (so far).

Whether or not SMT is a good investment from here though is a different question, of course.

Walp, I very much didn't want to bring back the whole discussion around whether SMT is failing or not, I agree it's been done to death. What I was doing was calling out the hand wavey "I'm up xyz% in 6 years, I've done OK!". The only point I wanted to make is that in order to say an investment has done okay, you need to compare it with benchmarks and inflation. Like you say, it's all relative. If you were in Venezuela and your investments increased by 100% in 5 years, you'd be very much poorer in real terms. Extreme example but you get the idea.

So the performance of similar investments, and inflation, bears no implication on whether or not 115% represents decent performance? Walp, what do you think?

Walp, I agree on the general positive long term outlook which is why I remain a holder here. I try to keep my opinions based in reality though. The current reality is that holding this for 6 years would have resulted in poor risk adjusted performance, let's not pretend otherwise.