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Shares of Scottish Mortgage Investment Trust PLC (LON: SMT) just broke to new all-time highs reaching a high of 1458p earlier today. What’s next for the fund?
The investment fund’s bet on growth stocks continues to pay off as the cyclical rotation away from growth to value stocks comes to an end triggering a rally in growth stocks.
In a recent interview, SMT’s co-fund manager Ton Slater said that investing in upcoming biotech stocks is a risky strategy, but one that pays off significantly when successful.
For example, Ginkgo Bioworks is one of SMT success stories after the fund invested £44 million in the MIT spinoff starting in 2016. The stake is now £450 million due to an impending SPAC merger, representing a 10X (1000%) return for the fund.
While Tom Slater and his co-fund manager James Anderson have criticised the rush to become public companies by listing via Special Purpose Acquisition Corporations (SPACs), the fund has benefited immensely from the trend.
The Scottish Mortgage Trust has seen at least five of its holdings list on public stock exchanges via Spacs in the recent past. Some have already completed the listing process, while others are about to list.
However, not all of its investments have been successful; Zymergen, one of its healthcare stocks, has lost 80% of its value in the past month.
Still, the fund managers are not worried because each investment makes up a small portion of the firm’s £20.4 billion investment pot.
Tom Slater, which is set to take over from James Anderson, as the lead fund manager, noted that the price of getting its large winners was the small losses they incur on a portion of their investments that go bust.
Some of SMT’s most prominent winners include Amazon.com and Tesla, which account for a significant portion of the fund’s investments.
From a technical perspective, the recent surge in SMT stock to new all-time highs could continue if the 1417 support level holds going forward.
*This is not investment advice.
Scottish Mortgage shares price.
Scottish Mortgage shares are up 19.31% this year and have just risen to new all-time highs. Will they keep rising?
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