PYX Resources: Achieving volume and diversification milestones. Watch the video here.
"There are gainers people on here bought in at £3.90 recently, a 50p gain.Funny that because I was banned from buying around that time."
Maddmax, there was no buying ban. It would have been your investment platform trying to handle the complexity of the issue, during which they stopped trading in AV. Different platforms handled it with varying degrees of competence.
Retirement - I'm not sure why you're calling bull**** on £3.90 buy-ins. It would have been perfectly simple to set up a buy limit order and fund it with money unlinked to the return of capital. I bought more immediately after consolidation at £3.95, well before I'd received the RoC. GL.
According to its latest factsheet, the two top holdings in the portfolio at the end of April were the biotech Moderna (Nasdaa: MRNA) and industrial technology group ASML (Nasdaq: ASML). Both of these companies have substantial competitive advantages. Moderna is the world’s leading mRNA vaccine developer while ASML is one of the world’s largest producers of equipment for the semiconductor industry.
After falling 44% and 31% respectively in the year to date, Moderna is selling at a forward price/earnings (p/e) ratio of just 4.7 while ASML’s multiple is around 10% below its five-year average.
These holdings are a great example of Scottish Mortgage’s investment style in action. What’s more, their current valuations hint that maybe the sell-off in both the trust’s shares and those of the underlying holdings has gone too far.
Rupert Hargreaves owns shares in the Law Debenture Investment Trust
ENDS.
To put it another way, yes, recent losses might be painful to watch, but investors need to focus on the investment process used by Scottish Mortgage, rather than its performance figures.
The man responsible for the trust’s market-beating performance was James Anderson, who recently stepped down from his position at Baillie Gifford, the fund manager behind Scottish Mortgage.
In a recent interview with MoneyWeek, Anderson explained that much of Baillie Gifford’s (and as a result Scottish Mortgage’s) performance can be traced back to the decisions the organisation made after the great financial crisis. The group reviewed its entire business model and decided to become a “truly global, truly long-term investment firm.” Its analysts realised that the majority of long-term returns come from just a tiny fraction of stocks (the estimate is 4%). So, Baillie Gifford decided to focus on finding these super-star businesses.
Of course, there was never any guarantee this strategy would work. Trying to find the top 4% of stocks means there’s a 96% chance of failure – the odds are stacked against the fund managers. That’s why even after the firm’s run of success over the past 20 years, Scottish Mortgage still has its critics.
A sprinkling of luck combined with a long-term mentality
Some critics have argued that the firm got lucky with its bets on companies such as Tesla (Nasdaq: TSLA), which have seen their valuations explode beyond any reasonable expectation.
There is always going to be an element of luck in investing, that’s just part of the process. Still, I think it would be a mistake for investors to attribute too much of Scottish Mortgage’s recent success on luck alone.
Baillie Gifford has built a culture based on long-term principles and ideals, and that allows its fund managers to look past short-term headwinds. Anderson noted that after the financial crisis, the firm “ended up buying Apple on three to four times earnings.”
Many investors do not have the “strength to endure” the vicious ups and downs that come with growth investing, giving Baillie Gifford’s managers an edge. The fact that the investment trust structure also provides permanent capital is another benefit. The managers do not have to worry about selling assets to meet redemptions.
That lets the team focus on doing what it does best, finding brilliant individual companies with competitive advantages and holding onto them.
While I think investors should be focusing on the trust’s process, not its performance or indeed the performance of individual equity holdings, I do think it’s worth looking at some of the top holdings in the portfolio.
https://stocks.apple.com/A2ZcUm_UeQkGXS_QKg2rtfg
Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?
After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if now is the time to buy.
The Scottish Mortgage Investment Trust (LSE: SMT) has been part of the MoneyWeek investment trust portfolio since its launch in 2012. It’s likely that this trust features in many of our readers’ portfolios and it has been a winning bet for much of the past decade.
At one point, the shares were up 1,000% on our purchase price, making it a key contributor to the 17% per annum return the portfolio achieved between launch and the end of 2021.
As the trust has soared in value over the last decade, we’ve resisted the temptation to take profits mainly as a hedge against being wrong. At MoneyWeek we’ve always had a value bias, but we’re also aware that value doesn’t always work. Some growth stocks have achieved far better returns than value equities and it wouldn’t be sensible to ignore this fact.
Putting all of your investing eggs in one basket is never a sensible strategy (even the best investors make mistakes occasionally). So, owning a growth-focused trust such as Scottish Mortgage alongside more value-focused entities such as the Law Debenture Trust (LSE: LWDB) offers the best of both worlds.
Unfortunately, after a decade of market-beating returns, we’re now seeing what happens when the market turns against growth stocks. Shares in the investment trust have slumped nearly 45% this year. Meanwhile, its discount to its underlying net asset value has blown out to around 13%, one of the highest levels in recent memory.
This performance will certainly have a negative effect on the performance of the MoneyWeek investment trust portfolio, but diversification across the equally-weighted portfolio should cushion that.
The question investors might be asking after recent declines is if now is the right time to bulk up their holdings in the Scottish Mortgage Investment trust?
The Scottish Mortgage Investment trust’s mentality should persevere
The last time Merryn reviewed the MoneyWeek investment trust portfolio at the end of March, the investment advisory panel recommended that investors take a long-term view of the trust’s recent losses.
Simon Elliot of Winterflood pointed out that while SMT is best-known for its large holdings in giant tech groups, it has also been highly successful at recycling capital into “less well-known companies with greater long-term growth prospects.”
Sandy Cross of Rossie House and Investec’s Alan Brierley also noted that the MoneyWeek investment trust portfolio was designed for long-term wealth creation and it is a “mug’s game trying to call short-term, albeit painful fluctuations.”
Indeed. I can't believe I'm only 5% down now, having been >40% down not so long ago.
Yes, I asked last Friday (on your BBB Time to buy! thread) if Simon Thompson is still of the same view that he expressed in that article.
But I'm not sure I understand much of the rest of your post. "Next declared divi"? BBB has never paid a dividend. And why do you think there would be a "special dividend" after last autumn's return of capital? There don't appear to be any sell-offs on the horizon, and if there were they would most likely hang on to the cash for potential further investment down under and maybe even SA (I don't think Scandinavia will do anything).
Also, "cashed out of AV today at 380, took my cash gain from buying in at 392 after consolidation"? AV closed today at 436.40 (HL) and I'm reasonably well up, having bought more at 395 post-consolidation. You certainly wouldn't have made a "cash gain" selling at 380 having bought at 392. It doesn't seem to make sense, but my apologies if I'm missing something.
Rest assured, Midas, I would. And your reply only confirms the view. For all I know you might be a financial genius, but you're clearly no medical expert or epidemiologist, nor are you apparently capable of discerning and analysing conspiracy theories. If you had any knowledge of linguistics or how news media works it would have been clear in your response. But ...
Bye now.
Historically low interest rates and a flood of easy money hitting the markets after the 2008 financial crisis created perfect conditions for growth stocks to flourish, as investors headed for riskier assets in search of a decent return. But it is not a rising tide that has lifted the fund’s return alone. Even after the 27 per cent decline in net asset value over the year to April, the trust has delivered a return of 565 per cent over the past decade and almost 80 per cent over the past three years, more than twice that generated by the benchmark FTSE All World Index, which includes some of the largest technology companies, also beneficiaries of ultra-loose monetary policy. That could comfort investors questioning whether the stellar returns before this year were more a result of luck than stockpicking skill.
The risk associated with backing Scottish Mortgage is higher, but so, too, are the potential compound returns on offer for those who can hold their nerve long enough.
ADVICE Buy
https://stocks.apple.com/AVJ8DKtYcR3ygOxULrDHDKg
Risks are high but so are the rewards at Scottish Mortgage Investment Trust
Emma Powell, The Times, May 25 2022
Believers in Scottish Mortgage Investment Trust need to maintain their faith more than most right now. The wind has turned against the FTSE 100 constituent, precipitating a share price fall far greater in magnitude than those at the start of 2020 or during the 2008 financial crisis.
A regulatory clampdown on Chinese technology companies and the prospect of more aggressive interest rate rises by the US Federal Reserve have caused a sell-off in the growth stocks that make up the trust’s largest holdings. Its net asset value shrank by 14 per cent over the 12 months to the end of March, a dramatic reversal from the 111 per cent expansion in the previous year.
Indeed, the shares have fallen further than the value of the trust’s holdings, which means a rare discount has opened up since the start of this year, now at almost 11 per cent. The question today is whether investors have the appetite to withstand a further decline in the share price in the immediate term, in the hope of a revival of the returns it has delivered in the past.
Scottish Mortgage, Baillie Gifford’s best-known investment trust, has made its name as an early backer of companies that it reckons have high growth potential, including an initial stake in Amazon in 2004 and Tesla in 2013. Such bets take time to be proved right, or indeed wrong, which means that even the fund’s own managers discourage those that aren’t willing to park their cash for at least five years from buying in. Long-term investing “requires the ability to endure periods of intense discomfort”, Lawrence Burns, deputy manager, has told investors. He and Tom Slater, the fund’s lead manager, stepped up to run it when James Anderson left in April after 22 years with the trust.
Rising rates will continue to make re-rating difficult for American technology stocks such as Amazon and Tesla. The belief that tighter regulation would prove more of a blow to such companies in the West than in the East has proved a costly bet. Chinese groups including Alibaba, the ecommerce giant, and Meituan, the food delivery company, sapped the most juice out of the fund after suffering falls in value of more than 40 per cent in the year to March.
Underestimating the pace and scale of regulatory change that could occur in China and cutting holdings in western technology stocks over their Chinese counterparts was a mistake, the managers have conceded, but that is not an indication of any intention to reduce Chinese exposure. Will the fund be bitten twice, or more? That depends on whether you believe that the worst of the regulatory crackdown is behind us; the threat of US sanctions is already accounted for in much-reduced stock valuations, and structural growth areas such as ecommerce don’t reverse.
Valueplay: I wouldn't like you to think I'm blaming you for my own current position re: OCDO. Not in the slightest. I would never make my investment decisions based on the views expressed anonymously on an online message board. I do my own research but I do respect and understand your own approach.
What I have more of an issue with, however, is the admirable enthusiasm with which you lauded and pressed the positives of the stock when Re:imagined was announced and the great detail you went into in doing so, compared with your disappearance and total silence when the SP began to collapse and announcing you'd pulled out altogether some 2/3 weeks after having done so.
In these discussions I feel that, absent illness or other serious issues that preclude involvement here (which you haven't mentioned), it is important, after such a major involvement, to remain engaged if the tide changes as dramatically as it has done with OCDO. Otherwise one risks losing the credibility of one's opinions.