Latest news with #ScottishMortgage
Yahoo
9 hours ago
- Business
- Yahoo
The FTSE 100's worst stock for passive income could be a long-term growth opportunity to consider!
Founded in 1996, Polar Capital Technology Trust's (LSE:PCT) a stock that won't appeal to those on the lookout for passive income opportunities. That's because it doesn't pay a dividend. In fact, it never has. And it's the only current member of the FTSE 100 that adopts this approach to shareholder distributions. Instead, it focuses on capital growth. During the five years to 31 May, the trust's share price has increased 71% and its net asset value's risen 119%. This compares favourably to another FTSE 100 technology-focused trust – Scottish Mortgage Investment Trust – that's seen its share price rise by 38% during this period. However, this fund invests heavily in unquoted companies, which can be difficult to value. By contrast, much of Polar Capital's growth can be attributed to having positions in each of the 'Magnificent 7'. At the end of May, six of these stocks were in the trust's top 10 holdings. However, it should be pointed out that an equal investment in all seven would have generated a return of over 300% since June 2020. But it's wise to have a diversified portfolio. By spreading risk across multiple positions, it's possible to mitigate some of the volatility that arises from investing in the stock market. And that's one of the advantages of an investment trust. By owning one stock, an investor will have exposure to multiple companies often in different jurisdictions. However, although Polar Capital has positions in 98 stocks, they're all in the same sector. Its manager is particularly keen on artificial intelligence (AI). Indeed, it describes itself as an 'AI maximalist'. Also, over 30% of its exposure is to the semiconductor industry. This could be a concern because history tells us that these types of stocks can be volatile. The tech-heavy Nasdaq dropped 75% between March 2000 and October 2002. But the trust's currently (27 June) trading at a near-10% discount to its net asset value. In theory, this means it's possible to gain exposure to the world's biggest tech stocks for less than their market value. However, over 70% of its value comes from North American stocks. Here, there's still a significant degree of uncertainty as to how President Trump's approach to tariffs will affect the economy. According to JP Morgan, there's a 40% chance of a recession this year. And due to their lofty valuations, a downturn's likely to affect the tech sector — and the Magnificent 7 in particular — more than most. For those who believe technology stocks will continue to deliver over the long term, I think Polar Capital Technology Trust's a share to consider. But only as part of a well-diversified portfolio. And anyone taking a position shouldn't expect to receive a dividend any time soon. The post The FTSE 100's worst stock for passive income could be a long-term growth opportunity to consider! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. James Beard has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Apple, Cloudflare, Meta Platforms, Microsoft, and Nvidia. 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. Motley Fool UK 2025
Yahoo
9 hours ago
- Automotive
- Yahoo
Bad value? Fair value? Still a bargain? Up 43% in weeks, here's how I see Tesla stock today
It has been a roller-coaster ride for shareholders in Tesla (NASDAQ: TSLA). When? Take your pick! Tesla stock has soared 43% since late April alone. It is up 66% in a year and 413% in five years. But there have been some dizzying drops too. Even after its recent rise, the share price is a quarter below where it stood in December. Clearly, owning Tesla is not for the faint-hearted. But, as the share price has demonstrated over the long term, risks can sometimes come hand in hand with brilliant returns. So at its current price, could Tesla be a bargain for me to add to my portfolio? Only time will tell. A bargain is something that has been bought for less – ideally a lot less – than it turns out to be worth. There are two elements to that. One – what Tesla stock would cost me now – is crystal clear, not just to me but to everyone in the market. The second element – what it is actually worth – is far, far harder to gauge. Some shares actually trade for less than a sum of the parts. For example, Scottish Mortgage Investment Trust (itself a long-term Tesla shareholder) sells at a discount of around 10% to its net asset value. By contrast, at the end of the first quarter, Tesla's net asset value was well under 10% of its current market capitalisation. On that basis, the Tesla stock price certainly does not look like a bargain. However, that is only one way of valuing a company. A different approach than a hard, cold look at the balance sheet as it stands today is to consider what value those assets might help the company create for shareholders in future. I think it is fair to say this is how many investors have long valued Tesla stock. It has proven adept at growing sales and turning losses into profits over time. That is thanks to assets it still has, including its brand, proprietary technology, a vertically integrated manufacturing and marketing model, and some very talented employees. They could help propel the company even further in future. It has ambitions in high-potential, fast-growing business areas including artificial intelligence (AI) and robotics. It also has ambitions to expand into both trucks and self-driving taxis at a commercial scale. If it can do well enough even in just some of those areas, while performing solidly in its existing business, today's Tesla stock price may yet come to be seen as a bargain. However, while the potential reward part of that storyline attracts me, the actual risks do not. For one thing, a lot of the potential businesses are little more than that. Tesla has yet to prove it can roll them out at scale, let alone profitably. Meanwhile, the base business is struggling. Tesla's power generation unit has been performing strongly and has ongoing growth potential. But the car business saw sales fall slightly last year, while in the first quarter of this year, they slumped. In a highly competitive electric vehicle (EV) market, there is a risk of a permanent shift. Meanwhile, competition could squeeze profit margins. I do not think the current Tesla stock price adequately reflects such risks, so I will not be investing. The post Bad value? Fair value? Still a bargain? Up 43% in weeks, here's how I see Tesla stock today appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Over the last 2 years, this investment trust has doubled the FTSE 100 index's return
The FTSE 100 index has risen by around 18% in the past 24 months. Add in the dividends, the total return rises above 20%. That's a solid showing from the blue-chip index, especially considering all the economic and tariff uncertainty over this period. However, one FTSE 100 investment trust has doubled that, delivering a share price return of roughly 55% since June 2023. The name in question is Scottish Mortgage Investment Trust (LSE: SMT). However, it has been far from plain sailing for this growth-focused trust in recent years. Indeed, despite this strong two-year showing, the Scottish Mortgage share price remains 35% off a peak reached in late 2021. Here are three core reasons why I think the stock is worth considering right now. One quirk of investment trusts is that they can trade at a discount to their underlying net asset value (NAV). In the case of Scottish Mortgage, with its share price currently at 996p, the discount to NAV is just over 11%. In other words, investors can buy £1 worth of assets for just 89p. While there's no guarantee the discount will ever narrow, which is a risk, it also provides an attractive entry point for investors, in my opinion. Scottish Mortgage is run by Baillie Gifford, the Edinburgh-based asset management giant. Due to its scale and reputation for being a patient shareholder, Baillie Gifford gets invited by founders to invest in some of the world's most exciting private companies. For example, after it supported Tesla despite a lot of scepticism and criticism, Scottish Mortgage got to invest in Elon Musk's other firm, unlisted Space Exploration Technologies (aka SpaceX). This has been a 10-bagger since 2018, and is now the trust's largest holding, at 7.2% of the portfolio. That said, one risk I see here is Elon Musk's fractured relationship with President Trump. This could easily see SpaceX's $350bn valuation savagely marked down at the next opportunity, as investors worry about the potential ramifications of this falling out. And this would obviously reduce the value of Scottish Mortgage's largest holding. In a worst-case scenario, SpaceX could get fewer future US government contracts. Meanwhile, the firm's gigantic Starship rocket spectacularly blew up on 19 June. While such explosions are part and parcel of rocket tests, this follows another fiery Starship failure a few weeks ago. So, SpaceX is definitely facing a few challenges right now. Nevertheless, the fact remains that Scottish Mortgage, unlike most other trusts, gets to invest in the world's most exciting start-ups. It has positions in Stripe, TikTok-owner ByteDance, and Fortnite-maker Epic Games. More recently, it has invested in quantum computer start-up PsiQuantum and British fintech Revolut. Both could go public over the next couple of years, potentially boosting Scottish Mortgage's holdings. A massive underlying theme of the portfolio is artificial intelligence (AI). The managers think this technology will have profound implications over the next couple of decades. AI stocks held include chip titans Nvidia and Taiwan Semiconductor Manufacturing. Also in there is Amazon, whose AWS cloud computing platform is democratising the technology by making powerful AI tools accessible to a wide range of users and industries. Scottish Mortgage offers a ready-made portfolio of top-tier AI companies. The post Over the last 2 years, this investment trust has doubled the FTSE 100 index's return appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Ben McPoland has positions in Nvidia, Scottish Mortgage Investment Trust Plc, and Taiwan Semiconductor Manufacturing. The Motley Fool UK has recommended Amazon, Nvidia, Taiwan Semiconductor Manufacturing, 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-06-2025
- Business
- Yahoo
The Trump-Musk spat could have implications for the Scottish Mortgage share price
Since its post-'Liberation Day' low, the Scottish Mortgage Investment Trust (LSE:SMT) share price has recovered 22%. And although it has never quite captured the highs of late 2021, compared to June 2020, it's up 33%. But the trust has stakes in two of Elon Musk's companies — Tesla and Space Exploration Technologies (SpaceX) — that could be affected by Thursday's (5 June) social media spat between the 'first buddy' and President Trump. As the two were publicly trading messages, Tesla's stock tanked 14%. Although the fallout didn't help, I'm sure some of this could have been due to the earlier news that the electric car maker's UK sales were 36% lower in May compared to a year earlier. Okay, the British market accounts for a small proportion of cars sold. But this trend mirrors a similar pattern in other parts of the world. Ironically, it's Musk's close relationship with the US president that's sometimes blamed. At 31 March, Scottish Mortgage's stake in Tesla accounted for 0.8% of the trust's assets. All other things being equal, a 14% fall in the EV maker's stock market valuation would reduce the trust's share price by only 0.11%. More significantly, it has a 7.8% exposure to SpaceX, worth £1.07bn. It's the biggest holding in the trust's portfolio. And Trump's threatened to remove government subsidies and contracts from all of Musk's businesses. Since 2008, the space exploration group has received more than $20bn from NASA and the Department of Defense. But Musk didn't seem too bothered. He posted on X: 'In light of the President's statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately'. Of course, this could all blow over soon. All brothers — that's how one US interviewer recently described their relationship — fall out from time to time. But given the ferocity of the exchanges, it's hard to see how. However, despite Scottish Mortgage's exposure to SpaceX, shareholders don't appear concerned. On the day after the public row, its share price was largely unaffected. But that's one of the advantages of an investment trust. Risk is spread across several businesses, often in different countries and industries. Indeed, Scottish Mortgage has holdings in 95 companies operating in five continents. It seeks only to invest in the world's 'exceptional' growth companies. Currently, the shares trade at a 10% discount to its net asset value (NAV). This implies the trust's undervalued. But it has a large exposure (26.2% of assets) to unquoted companies — including SpaceX — which can be hard to value. If the space group's shares were publicly traded, I'm sure they would have plunged on Thursday. But in the absence of an active market of buyers and sellers, it's difficult to accurately measure their value from one day to the next. Having said that, if SpaceX went out of business tomorrow, over £1bn would be wiped off the trust's asset value. But ignoring Musk's businesses, the trust's impressive track record is one reason for long-term growth investors to consider taking a stake. In the 10 years to 30 April, its share price has increased 260% and its NAV has soared by 318%. It benchmarks its performance against the FTSE All-World Index. Over the same period, this increased by 177%. The post The Trump-Musk spat could have implications for the Scottish Mortgage share price appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Beard has no position in any of the shares mentioned. The Motley Fool UK has recommended 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
07-06-2025
- Business
- Yahoo
Here's why the Scottish Mortgage share price is back at 1,000p
The Scottish Mortgage Investment Trust (LSE: SMT) share price has risen to £10 again in recent days. This means it's up nearly 50% over the past two years, and 23% since early April. Here, I want to look at what might have fuelled the recent turnaround, and whether it could continue. Scottish Mortgage's focus on disruptive companies more often than not leads it to the tech-packed US stock market, particularly the Nasdaq. Around 61% of the FTSE 100 investment trust's portfolio is in US stocks. Therefore, a recovery in share prices across the pond has underpinned Scottish Mortgage's short-term performance. The Nasdaq is now 28% higher than its April trough. That said, there have also been some notable jumps in a few key holdings. Latin American e-commerce giant MercadoLibre hit an all-time high in early June, as did audio streaming platform Spotify. Indeed, Spotify stock is now up 805% since the start of 2023! While the trust has been selling some Nvidia shares recently, it's still a significant holding (around 2.3% of the portfolio). And the AI chip king has also been on a hot streak, surging 51% since the April sell-off. It should also be noted that the FTSE 100 itself is now just a whisker away from a 52-week high — and therefore a new record. One key theme that Scottish Mortgage has invested in heavily is the digitalisation of global finance. It has called this one of 'the world's most transformative trends'. Key holdings here include MercadoLibre and Nu Holdings (Nubank) in Latin America, Affirm and Stripe (unlisted) in the US, and Sea Limited and Ant Group (unlisted) in Asia. Sea is up 61% this year, while Affirm has rebounded 62% since early April. Somewhat rarely for the trust, it does have a couple of UK-based fintechs in the portfolio. These are money transfer app Wise and neobank Revolut, which is private. The Wise share price jumped close to a record high this week after the firm posted strong annual results. Wise also said it intends to transfer its primary listing to the US, which will allow it to work towards inclusion in major US indexes. Whether the trust keeps rising in the near term is largely dependant on what the US market does. We know Trump's tariffs are hurting the global economy, so this is a risk to American corporate earnings and the value of Scottish Mortgage's portfolio. Investors in the trust need to be prepared to ride out sometimes stomach-churning periods of volatility. On the flip side, the global IPO market is warming back up again (though not in London, unfortunately). Revolut is reportedly preparing for a public listing that could value the company at over $45bn, while Ant Group might list in Hong Kong later this year. These massive IPOs could help boost Scottish Mortgage's net asset value (NAV), assuming they're well-received by investors. It would also help relieve worries about the true value of its unlisted assets. Either way though, I still think Scottish Mortgage shares are worth considering. They're currently trading at an 10.8% discount to NAV, which I think is attractive given the long-term growth potential of the portfolio. The post Here's why the Scottish Mortgage share price is back at 1,000p appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Ben McPoland has positions in MercadoLibre, Nu Holdings, Nvidia, and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended MercadoLibre, Nu Holdings, Nvidia, Sea Limited, and Wise Plc. 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
