Scottish Mortgage heading for where

[Urbandreamer]

The object was to avoid Tesla, which I regard as a great company, I just don't want too much investment in them.

Perhaps someone else can find the exact quote, however I read a comment somewhere to the effect that, had SMT not been selling down their Tesla holding regularly, it would have ballooned to 30-40 percent of the portfolio (I forget the figure). SMT has, in effect, taken an enormous profit from Tesla and locked it in, deploying the proceeds elsewhere in the portfolio.

Best wishes

Mark.

This article backs up what you said.
https://scottishfinancialnews.com/artic ... investment

SMT's Tesla holding has reduced from 12% about a year ago to ... 12% today.

As SMT is now 11.25% of my portfolio I'll be selling some and deploying the proceeds elsewhere.

[scrumpyjack]

Perhaps someone else can find the exact quote, however I read a comment somewhere to the effect that, had SMT not been selling down their Tesla holding regularly, it would have ballooned to 30-40 percent of the portfolio (I forget the figure). SMT has, in effect, taken an enormous profit from Tesla and locked it in, deploying the proceeds elsewhere in the portfolio.

Possibly the profit would have been even more enormous if they hadn't sold it down...

Scott.

That would have been contrary to the manager's mandate, which includes the requirement to have 'a reasonably diversified portfolio'.

I'm happy for them to stick to that mandate and not bet the farm on a single company (or bitcoin!)

[UncleEbenezer]

Checking Baillie Gifford ITs, SMT is the only one at a discount (-0.1%), rest at a premium. Maybe because some are saying the time to buy has been and gone, or due to heavy weighting in risk assets (Tesla) or possibly now is the time to bag a bargain before it's next growth run.

Haven't paid attention for a while, but for a long time, SMT were issuing new equity pretty-much daily to prevent a premium growing.

[scotia]

Checking Baillie Gifford ITs, SMT is the only one at a discount (-0.1%), rest at a premium. Maybe because some are saying the time to buy has been and gone, or due to heavy weighting in risk assets (Tesla) or possibly now is the time to bag a bargain before it's next growth run.

Haven't paid attention for a while, but for a long time, SMT were issuing new equity pretty-much daily to prevent a premium growing.

The close control of the discount/premium by Issuing Shares from Treasury and Purchasing Shares back into Treasury has been a feature of SMT which I fully approve of.
Looking back at SMT RNS, I think the last Issue of shares from Treasury was on 5th January, followed by Purchases back into Treasury on 13,15,19,21,22,25,28,29 January.
After the Issue on 5th January there were 1,449,262,241 shares plus 35,518,639 in Treasury
After the Purchase on 29th January there were 1,439,081,905 shares plus 45,698,975 in Treasury.
So the difference between these two figures is 10,180,336 - or about 0.7% of the share total.

[Dod101]

I did not realise that SMT have what in effect is a discount control policy. That accounts for the share price remaining fairly close to the NAV and would appear to answer Adamski's query.

In the Annual Report they call it 'managing liquidity' not a discount control policy. I do not see much difference, but either way it is good for shareholders in general.

Dod

[nmdhqbc]

I assume these discount mechanisms have some limits? For instance what happens if the massive positive tide for SMT turns and this style of investing is badly out of favour for multiple years. Presumably a discount would grow and they'd need to buy back lots of shares. At the extreme could they not end up with a Woodford issue of having to sell the liquid stuff leaving ever greater portion of unquoted companies. Seems like if the discount mechanisms are too rigorous in the extreme cases you lose one of the major benefits of the investment trust structure. They in essence become open ended funds that can borrow. I'm sure the manager understand this more than I so would not let this happen.

[Dod101]

I assume these discount mechanisms have some limits? For instance what happens if the massive positive tide for SMT turns and this style of investing is badly out of favour for multiple years. Presumably a discount would grow and they'd need to buy back lots of shares. At the extreme could they not end up with a Woodford issue of having to sell the liquid stuff leaving ever greater portion of unquoted companies. Seems like if the discount mechanisms are too rigorous in the extreme cases you lose one of the major benefits of the investment trust structure. They in essence become open ended funds that can borrow. I'm sure the manager understand this more than I so would not let this happen.

They get approval each year from their shareholders and there is usually a limit on the price they pay (by reference to the NAV at the time of the proposed purchase) and also on the total number of shares they may buy back (say maybe a maximum of 10% of the shares in issue in any one year) so as to avoid just the sort of thing you mention.

They will usually buy back at a discount to NAV and will only issue shares at a premium so these actions benefit continuing shareholders.

Dod

[airbus330]

Appears that SMT and USA have each cut their hold in Tesla by 50% to lock in profits. Good move.
https://citywire.co.uk/investment-trust ... ider+Daily

[Dod101]

And the latest price for Scottish Mortgage £14.08.Blimey!

Dod

[Lootman]

And the latest price for Scottish Mortgage £14.08.Blimey!

Interesting if SMT is up today when US markets are closed for President's Day.

Apparently Berkshire Hathaway will tomorrow announce a new large holding. Could it be Tesla? Really doesn't seem like a Buffett stock, but you never know.

[Dod101]

I have just sold some yet again at £14.10. Incidentally have bought Beazley, the Lloyds Underwriter's at £3.59 and a yield of 3.1%. I read something of them at the weekend and am persuaded although I have never thought of them as particularly attractive. Quoted Lloyds insurers are a dying breed though and therefore surely have a scarcity value but the yield is fine by me in what promises to be a hardening market.

Dod

[SalvorHardin]

Apparently Berkshire Hathaway will tomorrow announce a new large holding. Could it be Tesla? Really doesn't seem like a Buffett stock, but you never know.

I'd be amazed if it was Tesla. Berkshire has owned a big stake in the Chinese electric vehicle and battery manufacturer BYD since 2008, so he knows quite a bit about the sector.

If it's a technology company my money would be on Google (sorry, "Alphabet"). Buffett and Munger have praised Google on many occasions, saying that they screwed up by not buying Google after they realised how useful Google's search optimisation was for Berkshire's GEICO insurance business.

Gossip on the various Berkshire Hathaway boards, particularly The Motley Fool, favours: Johnson & Johnson, Google, Suncor (Canadian oil producer), PayPal, Disney.

We should know tomorrow, since Berkshire is supposed to report its shareholdings as of 31st Dec 2020 by then.

EDIT - There's quite a few pundits out there saying that if Buffett goes into electric vehicles, it's more likely to be by increasing its 5.5% holding in General Motors.

[unperplex]

I have just sold some yet again at £14.10. Incidentally have bought Beazley, the Lloyds Underwriter's at £3.59 and a yield of 3.1%. I read something of them at the weekend and am persuaded although I have never thought of them as particularly attractive. Quoted Lloyds insurers are a dying breed though and therefore surely have a scarcity value but the yield is fine by me in what promises to be a hardening market.

Dod

Yes and I see it was May 12 2020 when you posted “price 715 - Wow!” We were all surprised by how much SMT had increased, and now it has almost doubled from that figure - Wow ! I am not selling any of mine at the moment however - matter of opinion - de gustibus etc etc

[airbus330]

Buffett and Bitcoin? Too much?

[Dod101]

I have just sold some yet again at £14.10. Incidentally have bought Beazley, the Lloyds Underwriter's at £3.59 and a yield of 3.1%. I read something of them at the weekend and am persuaded although I have never thought of them as particularly attractive. Quoted Lloyds insurers are a dying breed though and therefore surely have a scarcity value but the yield is fine by me in what promises to be a hardening market.

Dod

Yes and I see it was May 12 2020 when you posted “price 715 - Wow!” We were all surprised by how much SMT had increased, and now it has almost doubled from that figure - Wow ! I am not selling any of mine at the moment however - matter of opinion - de gustibus etc etc

I have sold simply because it was by far my biggest holding and when I sell I usually buy something with a yield and hope of some capital growth. Even after my latest sale it is still my biggest holding. I doubt that I have ever held such a successful share, actually Tullow Oil was a 14 bagger but that was truly exceptional and was a smaller holding for me anyway. I have held SMT for more than 20 years and it is very probably at least a 14 bagger as well in that time, but so what? It is today's price that matters.

Dod

[unperplex]

Nice to reassure ourselves that SMT has shown good growth for so long (and it is not mostly concentrated in the last 12 months or so...)

[Urbandreamer]

I have sold simply because it was by far my biggest holding and when I sell I usually buy something with a yield and hope of some capital growth.
Dod

I'm sort of with Dod, although I did it by buying one holding that had similar growth. Then next time that I sold I invested in one with a high yield and little growth. More important than their prospects of return was to reduce my risks.

I happen to think that SMT is a really great investment. I would advise anyone who lacks a holding to invest. However it can become too big a holding. Indeed, on this thread I have been criticised for claiming that if you invest, you will have to trim the investment when it gets too big.

It's not about pulling up the flowers to let the weeds grow, it's about growing flowers and veg. You don't want too much of either.

[Dod101]

And what's more many flowers look good in a vase, and some, like sweet peas, thrive on being cut. In fact for the last 18 months or so Scottish Mortgage has behaved just like a sweet pea plant. So to thoroughly mix metaphors horses for courses.

I just feel more comfortable keeping it at a level where I feel comfortable. My holding is still even after my sale today, about twice my average holding which is quite enough for me. There is no yield to speak of so removing some capital profits, tax free, is a good move I think.

Dod

[Eboli]

For what it's worth I been selling SMT in tranches ever since it reached £8 and sold my last lot at £13.80. Like Dod, what remains is still about 3 times bigger than my next IT holding (WWH).

I would have hesitated recommending it to those not yet invested has it not been for SMT selling off its Tesla holding over the last few months. I note as of yesterday the Tesla holding is now the fourth largest at 5.1% after Tencent (6.5%), Illumina (6.1%) and Amazon.com (5.9%) as I do not think the Tesla valuation is sustainable (but bubbles always persists longer than you think possible...)

As my holding represents pure profit now I am happy to continue to hold what remains.

Eb.

[unperplex]

Fine, it is of course likely that SMT may “go off the boil” and cease to increase at the astounding rate it has over the last 12 months, however I note that even prior to this spike, it was still increasing at a rate of about 42% a year, which is ok by me. Everyone has their own strategy and I favour backing my winners. I shall not be selling in the near future, and shall buy some more if the price dips even further than today . I am quite content for it to be my biggest holding.