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Scottish Mortgage Shares (LON:SMT) Up 2.7% Today, Close To 52 Week Highs

Analyst Team trader
Updated 23 May 2024

Scottish Mortgage (LON:SMT) saw its shares climb by 2.7% to 893p, approaching 52-week highs on the back of its robust full-year financial results. This uptrend reflects increased investor confidence in the FTSE 100-listed investment trust, known for its focused investment strategy.

The trust's recent performance demonstrates remarkable gains within the investment community. Over the last 12 months, Scottish Mortgage's share price skyrocketed by 35.64%,. This impressive growth not only increases the value for shareholders but also significantly outpaces the gains of the FTSE 100 (+7.4%) and the FTSE 250 (7.59%).


The board's announcement of a share buyback program further strengthened market sentiment. The program, valued at a minimum of £1 billion, is set to unfold over the next two years and has been met with broad approval from analysts and investors alike.

In addition to capital gains, Scottish Mortgage has remained committed to delivering income to its shareholders. The trust has recommended a 3.4% hike in its dividend payout, taking the dividend per share to 4.24p. This increase continues Scottish Mortgage's longstanding tradition of consistent dividend growth.

Over the past decade, the trust has reaped significant outperformance against its benchmark. This success has been driven in part by astute investments in artificial intelligence (AI) players such as Nvidia, ASML, and Amazon. AI represents a pivotal theme in the trust's portfolio, with the leadership underlining the transformative potential of this technology. Nevertheless, this sector focus does introduce risks, notably if the tech sector were to experience a downturn. Despite this, the fund managers maintain an optimistic view on future growth prospects.

Deputy Manager Lawrence Burns has likened the trust's investment in AI to owning “royalties on global computing power,” emphasizing the strategic importance of such assets. The lead manager, Tom Slater, has indicated adjustments in their holdings, including a reduction in Tesla stakes and an expansion in SpaceX ownership.

With the increased emphasis on AI and the fund's long-term performance, many observers consider Scottish Mortgage shares to represent a compelling investment proposition for those looking to gain exposure to the AI sector for the long haul.

Overall, the combination of a narrowing discount, robust share performance relative to the NAV, a planned share buyback program, and strong dividend growth are key factors buoying investor sentiment around the Scottish Mortgage Investment Trust. Looking forward, the trust's distinctive focus on transformative technology, particularly AI, positions it as a unique player within the investment landscape.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.