Scottish Mortgage (LSE:SMT) shares are among the most watched on the FTSE 100. The share price collapsed towards the end of 2021 as investors moved away from growth stocks. Scottish Mortgage — a publicly listed investment trust — is heavily focused on growth and has significant exposure to American, Chinese and unlisted shares.
The trust is down 4% over the past week and now trades below £9. It had been a lot lower before its summer bull run. In fact, I was able to buy it around £7 for my SIPP.
But I’m looking to buy more for my ISA, and I think sub-£9 might be a good entry point. So let’s take a closer look at this stock and explore Scottish Mortgage’s outlook.
A turbulent year
Scottish Mortgage shares plummeted from highs of over £15 a share last year to less than £7 in May. The value of Scottish Mortgage shares reflects that of the value of the stocks it owns. So as holdings in growth stocks tanked in late 2021 and early 2022, so did Scottish Mortgage. Likewise, the more recent uptick has reflected a rebound for growth and tech stocks.
Earlier this year, it was clear that Scottish Mortgage would bottom out eventually, and £7 seemed about right. And since May, growth and tech stocks have largely outperformed value stocks.
This is partly because valuations started to look very attractive, but also because several tech stocks including Apple, Amazon and more recently Tencent, beat expectations in their much-awaited Q2 earnings. The latter two are both part of Scottish Mortgage’s top 10 holdings.
I often note Scottish Mortgage’s track record of picking the next big winner. The trust invested in Amazon and Tesla before they were household names and naturally, the returns were huge.
So one reason I like Scottish Mortgage is because their team has a knack for stock picking, and I’m hoping they’ve already bought shares in the next big winner.
However, there has been a change at the top. Baillie Gifford, which runs the Scottish Mortgage portfolio, is currently trying to adapt to life post-James Anderson after he retired three months ago. The fund is now bleeding money according to Bloomberg.
Nevertheless, I’m confident that its modus operandi of investing in innovation won’t change.
However, I’m not overly confident that the top 10 holdings, with the exception of NIO, will deliver much growth in the years to come. Instead I think the younger, lesser known holdings will be the source of growth. In fact, NIO is the only company in Scottish Mortgage’s top 10 holdings that I hold myself.
So would I buy more Scottish Mortgage shares at the current price? Yes, I would. However, I appreciate a downturn in economic growth worldwide and higher interest rates might pull some of its holdings down in the near term, but in the long run, I’m bullish on this innovation-focused trust.
The post Should I snap up Scottish Mortgage shares as they fall below £9? appeared first on The Motley Fool UK.
Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now while it’s still available.
You’ll discover what we think is a top growth stock for the decade ahead… and the performance of this company really is stunning. In 2019, it returned £150 million to shareholders through buybacks and dividends.
We believe its financial position is about as solid as anything we’ve seen.
- Since 2016, annual revenues increased 31%
- In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
- Operating cash flow is up 47%. (Even its operating margins are rising every year!)
Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today! So please don’t wait another moment…
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
- The Scottish Mortgage share price has suffered. Here’s why I’d still buy!
- When should I sell my Scottish Mortgage shares?
- Is there still time to buy Scottish Mortgage shares?
- Here’s how much I’d have now if I’d invested £1k in Scottish Mortgage shares 5 years ago!
- The Scottish Mortgage share price is on the up! Here’s why I’d buy
James Fox owns shares in Scottish Mortgage and NIO. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon, Apple, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.