The Scottish Mortgage Investment Trust PLC (LON: SMT) share price has fallen 7.03% in the past month, with its 3-month losses reaching 15.9% as investor sentiment towards the company remained bearish. The fund’s stock price trades at a 20% discount to its net asset value (NAV).
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The flagship trust from Bailie Gifford, which invests in high-growth companies such as Tesla, Alibaba, Tencent and Moderna, has seen its share slide over 60% from its 2021 high as the high interest rate environment triggered a shift from growth stocks to value stocks pushing its share price lower.
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However, the stock has fallen out of favour with investors, which explains why it is trading at a discount to its net asset value. The sell-off in SMT shares could also have been triggered by the boardroom battles, which have led to the appointment of a new board chair and other directors.
Amar Bhidé, who had been a Scottish Mortgage director since 2020, had disagreed with former chairperson Fiona McBain about the process of appointing two new directors to the fund's board and the risk posed by the fund’s unlisted companies. The two have since left the fund.
Scottish Mortgage has since appointed Justin Dowley, a former senior independent director, as its new Chairman replacing Fiona. Additionally, Bhidé was replaced by Patrick Maxwell, even as Paola Subacchi retired as an SMT director.
Now that the boardroom battles are over, one would expect SMT to start performing better, but the April decline tells a different story. SMT shares are still decidedly under the control of the bears, but there is still hope that the fund’s fortunes will change for the better.
Towards the end of March, the Financial Times reported that some hedge funds were trimming their short positions in the fund as they anticipated that the worst was over for SMT, but this was not the case, as evidenced by the April decline.
SMT shares have rallied higher over the past two trading days, and many hope the move could translate into a long-term uptrend. Still, it is too early to tell.
*This is not investment advice.
Scottish Mortgage (SMT) share price.
The Scottish Mortgage (SMT) share price has fallen 7.03% in the past month. So what’s next for the fund?
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.