Scottish Mortgage (SMT) Share Price Edged Lower on H1 Report

The Scottish Mortgage Investment Trust PLC (LON: SMT) share price edged lower after releasing its half-year report for the six months to 30 September 2023. The company’s interim report indicated that its portfolio companies, typically growth firms, are in robust health.

Favourable financial conditions have compelled companies to prioritise profitable growth. Additionally, the decline in stock prices has rendered valuations more attractive, creating a solid foundation for our long-term outlook. 

It is also important to acknowledge that SMT may experience periods of underperformance in the market, and the past six months have been one such instance. Since the end of March, sMT’s net asset value per share, with debt at fair value (‘NAV'), decreased by 2.7%, in contrast to a 4.3% rise in the FTSE All-World Index (both in total return terms).

Nevertheless, the investment manager’s overall performance record over the long term remains commendable. Over the past five years, SMT’s NAV has seen a gain of 59.6%, compared to 49.6% for the index, and over a decade, it has increased by 358.1% against 189.5% compared to the index.

Scottish Mortgage Trust’s board recommended a dividend payout of 1.60p per share, in line with last year’s payment,  having recognised that a stable dividend was crucial to most of its shareholders. However, the company remains focused on long-term capital appreciation. 

SMT’s core objective is to identify companies with exceptional growth potential and hold them patiently as they realize their potential. There are periods when the stock markets reward this approach, and there are times, like now, when they do not.

During the first half of the year, we invested approximately £74 million into six private companies, and one of our private holdings, the beauty company Oddity, went public. SMT noted that the recent gains in the market have been led by several large companies that have benefitted from the unfolding AI trends. 

NVIDIA, the chipmaker whose shares SMT acquired in 2016, has played a pivotal role in providing the necessary computing infrastructure for AI. The acceleration in NVIDIA's business has been nothing short of remarkable. Revenue guidance for the third quarter stands at $16 billion, compared to less than $6 billion just a year ago. 

Scottish Mortgage (SMT) share price. 

The Scottish Mortgage (SMT) share price edged lower on its half-year 2024 report.