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You keep saying all this "positive' stuff, but none of what you say ever explains why the SP is now at its all-time low. Down nearly 6% today alone. The reality of the BBB SP never matches your optimism, I'm afraid.
... says the RNS ...
So why is everyone suddenly selling BBB on the day the FTSE is up 1.15%?
I'm 40% down on this junk share now. I have no faith that it'll ever recover and I must now consider cutting my very substantial losses on it.
Lower-risk alternatives
If you think the driving forces around technology and disruption are set to reverse, SMT is not for you. However, if you think otherwise, the situation calls for patience. I would argue that as we face a more inflationary world, with more on-shoring of production and tighter supply chains, large-cap businesses with intellectual property assets and an ability to pass on extra costs to consumers will continue to thrive. In other words, the tech-enabled global brand platforms are precisely the businesses that might flourish in this new world.
Still, if you are yet to invest, perhaps you should wait for the discount to push out to 20%. Meanwhile, invest in a fund that actively benefits from market volatility, such as BH Macro or the Ruffer Investment Company, and move back into SMT once the mood shifts. If the fund’s focus on private, unlisted firms and its Chinese exposure still feels troubling, look at sister fund Edinburgh Worldwide, which has a more explicit mid- to small-cap tech and healthcare focus and is currently trading at a 13% discount to NAV.
2/2
A?t one point Scottish Mortgage (LSE: SMT) was the UK’s biggest investment trust by market capitalisation. It championed a generation of disruptors, ranging from Amazon to Tesla. But if you look at the investor bulletin boards, it is now the subject of much scorn and vitriol.
The most recent trading update showed that net asset value (NAV) total returns for the year to 31 March were -13.1%, compared with a 12.8% gain for the FTSE All World index. The share price currently trades at 692p, a 55% decline from its 1,543p peak. It’s now on a wide 16% discount to NAV (the average discount over the past year is 1.3%).
The struggle isn’t over
NOT YET TIME TO BUY THIS FALLEN STAR
Scottish Mortgage was hit by the tech crash. New investors should wait for the headwinds to ease
David Stevenson, ?Investment columnist
The headwinds facing SMT are unlikely to abate soon. The fund bet big on technology. Now, rising interest rates have triggered a sell-off in those growth stocks. There’s also the question of venture capital-style investments and what these are worth in today’s markets. At first, SMT found itself somewhat insulated from the growth stock sell-off because a large part of its portfolio was in unlisted private investments. Unquoted holdings represented 24.6% of the portfolio at 31 March, up from 20.2% a year ago. Initially, valuations for these companies weren’t hit as hard as the price of quoted stocks. That’s about to change. The current round of haircuts to valuations will be only the beginning of a long and painful process for many late-stage venture capital investments.
To be fair to SMT, there is a robust valuation system in place for these private companies. They are valued on a rolling three-month cycle (ie, roughly a third revalued every month), except for the half-year and full-year-end of the fund, or where there is a trigger event that indicates the fair value of the holding has changed, such as a funding round. I estimate we have at least another six months of cuts of anything between 10% and 30%.
Still, not all of SMT’s pain is external. Management has made some poor decisions, of which the big strategic mistake was a focus on Chinese internet platforms. One didn’t need a crystal ball to predict Tencent and Alibaba were in trouble with the Chinese government. That said, on pure valuation terms, firms such as Tencent are now some of the cheapest tech stocks on the planet (perhaps for a good reason).
So the rap sheet against SMT’s record is long and detailed. I can’t see the share price improving much this year. On paper this means I should sell my own holding, but I’m choosing to sit tight. The current portfolio is still unique. Unlike many global equity funds, there’s diversification between both public and private assets, while maintaining a continuing focus on global businesses that can grow as technology disrupts more and more sectors.
1/2
Pokerchips:
"The net proceeds of the Capital Raise is expected to give Ocado Group enough liquidity to fund the requirements of its existing and expected customer commitments into the mid-term, with no additional Group financing expected as the business becomes cash flow positive."
This seems to be all about staying afloat ("existing ... commitments"). "Expected customer commitments" and the fact that cash flow positive isn't going to be achieved for several years reveals the speculative nature of the stated reason for this raise.
You should have received the payment by now. I think it was all due to have been completed by May 31st in the UK and mid-June in the US. You should see it in your cash account. If not, contact your broker. You won't have seen the B shares in your account at all as they were redeemed immediately. It's that cash from that redemption that should be in your cash account.
"That inflation figure is incredibly high. A figure that would have been laughed at by all if you predicted it in January.. The economic environment has changed incredibly quickly"
The CPI in January was 5.5% and there were plenty of media pundits predicting a doubling by summer, even before Russia decided to give their military personnel the trip of a lifetime to a neighbouring country.
Also, from the replacement RNS:
"The original announcement erroneously stated that 12,578,616 shares had been placed with Baillie Gifford, raising gross proceeds of approximately £99,999,997. This should have been 11,100,000 shares placed, raising gross proceeds of approximately £88,245,000."
Valueplay - I'm not sure Proactive have got it right. This is from today's Times:
"Baillie Gifford, the investment management company, took about 12.6 million shares in the placing, raising around £99.9 million for Ocado. Capital Group, the US financial services company, took more than 7.5 million shares, raising about £60.1 million, and Apple III Trust, controlled by Jorn Rausing, the Swedish packaging billionaire whose father founded Tetra Pak, took slightly fewer, raising about £59.8 million."
https://stocks.apple.com/AbGRN8EtzSpKwEC-5_EE9Tw
"The net proceeds of the Capital Raise is expected to give Ocado Group enough liquidity to fund the requirements of its existing and expected customer commitments into the mid-term ... "
It's the inclusion of "existing" that is of concern.