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  • FIRST POST
    • Alz1986
    • By Alz1986 7th Jun 19, 6:10 PM
    • 87Posts
    • 20Thanks
    Alz1986
    Scottish Mortgage Trust - Bright Future?
    • #1
    • 7th Jun 19, 6:10 PM
    Scottish Mortgage Trust - Bright Future? 7th Jun 19 at 6:10 PM
    Wanted to get some of your thoughts on SMT, which is approaching 1 year I've been invested into. This is a large holding for me, and becoming concerned at its under performance having entered at its peak (bad luck), to my credit I stomached seeing it drop to £4.20 from £5.68, today it finished at £5.10p. I would have thought it touched back close to its peak at least once in the past year, but it hasn't.

    I understand its a popular investment, but is it overhyped? They get alot of positive coverage, and I've noticed articles on the Trust never highlight its peak against its current valuation. They are likely now to have a large negative NAV (running last 52 weeks) for a while.

    James Anderson talks alot about his good relationship with businesses, I'm getting concerned he may also have a good relationship with the journalists/organisations publishing the articles.

    Even when indexes were hitting all time highs in April, SMT was only managing £5.35.

    I like James Anderson, hevseems more trust worthy than Neil Woodford who looks more like a betting shop manager than a respected fund manager.

    SMT Since hitting its high's of £5.68p per share in late August, and the subsequent global sell off, has never actually recovered. Other funds whether large cap or small, index trackers have recovered and hit new high's.

    Their holding in Tesla is an obvious drag along with U.S' ongoing economic war/attacks on China affecting Tencent and Alibaba. Though I like Tesla and believe the future will be more Electric based, I suspected the holding was less about Tesla itself and more about winning a stake in Elon Musks Space X, unfortunately my theory turned out to be right as James Anderson confirms in this recent article

    https://citywire.co.uk/investment-trust-insider/news/scottish-mortgage-we-re-great-venture-capitalists-now/a1232883

    As for SpaceX Musk isnt planning to go public until they've sent a rocket to Mars, and they'll be doing this in 2024! And thats a big ambition to have, even if succesfull, why would it be worth anything more than Tesla's plunging valuation? In short, no returns will be made from such a relationship for some years atleast, while Tesla's drags the Trust. Couldnt they find somewhere else to invest their clients cash?

    Just looking for thoghts on why you all hold onto it, or rate it highly...? As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.
Page 2
    • StellaN
    • By StellaN 10th Jun 19, 3:51 PM
    • 302 Posts
    • 154 Thanks
    StellaN
    I hold SMT in my ISA but not as a core holding. Yes, it is quite volatile, however I am a long term investor rather than a trader so I am happy to retain SMT in my portfolio.
    • cloud_dog
    • By cloud_dog 10th Jun 19, 5:59 PM
    • 4,615 Posts
    • 2,892 Thanks
    cloud_dog
    It was up over 2% today so, it must be back in the 'good books'
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Voyager2002
    • By Voyager2002 10th Jun 19, 6:39 PM
    • 13,392 Posts
    • 9,222 Thanks
    Voyager2002
    It was up over 2% today so, it must be back in the 'good books'
    Originally posted by cloud_dog

    It's sure to end in tears.
    • StellaN
    • By StellaN 11th Jun 19, 11:24 AM
    • 302 Posts
    • 154 Thanks
    StellaN
    You seem very sure about this, maybe you could explain your reasons behind this comment?
    • AnotherJoe
    • By AnotherJoe 3rd Jul 19, 3:08 PM
    • 16,244 Posts
    • 19,484 Thanks
    AnotherJoe
    Serially under forecast todate. Hence why the shares continue to drift.
    Originally posted by Thrugelmir

    https://www.cnbc.com/2019/07/02/tesla-q2-2019-production-and-delivery-numbers.html


    Tesla’s stock surged in premarket trading Wednesday after the electric auto maker said it shattered its previous production and delivery records during the second quarter, soundly beating analysts’ estimates.
    The electric car maker released its delivery and production results Tuesday night, hinting at a strong third quarter that already has a backlog of orders. The news sent its shares soaring by almost 8% before the markets opened.


    Tesla forecasts are generally made by professional shorters and know nothing analysts


    With one exception, every analysts forecasts below is off
    Last edited by AnotherJoe; 03-07-2019 at 3:14 PM.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • newbinvestor
    • By newbinvestor 3rd Jul 19, 5:30 PM
    • 188 Posts
    • 39 Thanks
    newbinvestor
    Out of interest, what are the main differences between this kind of investment trust and a fund like one of Neil Woodfords.
    • AnotherJoe
    • By AnotherJoe 3rd Jul 19, 5:55 PM
    • 16,244 Posts
    • 19,484 Thanks
    AnotherJoe
    AIUI .. and I could be off here........... Funds are in theory priced at the actual underlying value of the assets they hold. eg say the fund held one billion of underlying shares, then the fund is worth one billion, and each unit is worth that value divided by how many units there are. If there were a billion units each unit would be one pound.
    If it was an Investment Trust with the same factors as above, whilst the trust shares should also be £1 each, people might pay more for them because they might think that Neil Woodford is a smart guy, knows more than they do and tomorrow he might sell soem of the investments buy something else and then see the value of that rise to £1.2BN. So people might be willing to pay (say) £1.05p a share which means the IT is at a 5% above its NAV.
    If you take WPCT, which is an IT, although (AFAICR) the NAV is about 85p the shares are priced at about 55p. Why is that? In theory you could buy shares at 55p and then woodford could sell the assets for 85p a share and then youd make 30p a share. Well, people dont believe the NAV is worth 85p a share they think (collectively) its about 55p. (Personally i think its half that).



    So, TL;DR the difference is, the price of an IT is determined by the balance between buyers and sellers. The price of a fund is determined by what the fund manager says its worth. (Until people dont believe them, start selling and the fund manager cannot sell the underlying assets quickly enough to keep up.
    • Reaper
    • By Reaper 3rd Jul 19, 6:35 PM
    • 6,712 Posts
    • 5,070 Thanks
    Reaper
    Out of interest, what are the main differences between this kind of investment trust and a fund like one of Neil Woodfords.
    Originally posted by newbinvestor
    Here's a simple starter page:
    https://www.which.co.uk/money/investing/types-of-investment/investment-trusts/investment-trusts-explained-agmsw3f4fnqq
    • stphnstevey
    • By stphnstevey 3rd Jul 19, 8:34 PM
    • 3,119 Posts
    • 503 Thanks
    stphnstevey
    https://www.cnbc.com/2019/07/02/tesla-q2-2019-production-and-delivery-numbers.html


    Tesla’s stock surged in premarket trading Wednesday after the electric auto maker said it shattered its previous production and delivery records during the second quarter, soundly beating analysts’ estimates.
    The electric car maker released its delivery and production results Tuesday night, hinting at a strong third quarter that already has a backlog of orders. The news sent its shares soaring by almost 8% before the markets opened.


    Tesla forecasts are generally made by professional shorters and know nothing analysts


    With one exception, every analysts forecasts below is off
    Originally posted by AnotherJoe
    News worthy as it is unusual Tesla does as Elon Musk says....

    This is a rollercoaster stock, value difficult determine as often Musk massively inflates it's value

    There are other huge car companies doing what Tesla does, just without the hype and with deeper pockets and established sales chains

    Not for me, however would actually like to be proven wrong as the concept is sound, execution is lacking
    • AnotherJoe
    • By AnotherJoe 3rd Jul 19, 9:23 PM
    • 16,244 Posts
    • 19,484 Thanks
    AnotherJoe


    News worthy as it is unusual Tesla does as Elon Musk says....

    This is a rollercoaster stock, value difficult determine as often Musk massively inflates it's value
    Musk actually advised against buying tesla shares last year


    There are other huge car companies doing what Tesla does, just without the hype and with deeper pockets and established sales chains
    Really? Who are they?

    Not for me, however would actually like to be proven wrong as the concept is sound, execution is lacking
    Originally posted by stphnstevey

    Execution lacking LOL
    Watch this
    https://insideevs.com/news/351297/u-s-electric-car-sales-moving-chart/
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • newbinvestor
    • By newbinvestor 3rd Jul 19, 10:06 PM
    • 188 Posts
    • 39 Thanks
    newbinvestor
    What is wrong's with Tesla's execution?
    The Model 3 for example is a mind blowing car. 250-300 mile range.
    Their own super charger network which is now easily available around the UK. The latest chargers can charge at 1000 miles of range added per hour, you would only need to stop for 20 minutes in a long journey. Think it's 20p/kwh which is reasonable. Usually the "engine" gets 4 miles per kwh.
    Incredible autopilot software and mobile app.
    Good delivery times as they make their own batteries, other EV brands struggle to meet demand, eg Hyundai Kona EV.

    I'm personally a massive Tesla fan. I think they're 5 years ahead of the game.
    • MarkCarnage
    • By MarkCarnage 3rd Jul 19, 10:15 PM
    • 128 Posts
    • 91 Thanks
    MarkCarnage
    This thread seems to be more about Tesla than SMT. Tesla is currently 4.4% of SMT assets. If the Tesla share price halves, or doubles for that matter, it's significant but not game changing for SMT. It is a stock which Baillie Gifford have had serious internal soul searching about too, hence the exposure was reduced at one point.

    Comparing SMT with Neil Woodford's fund....where does one start? I suggest that the poster has a look at the fact sheets for both funds and will then realise what different beasts they are.
    • cloud_dog
    • By cloud_dog 4th Jul 19, 9:14 AM
    • 4,615 Posts
    • 2,892 Thanks
    cloud_dog
    What is wrong's with Tesla's execution?
    Originally posted by newbinvestor
    I think it is generally acknowledged that Tesla is ahead of the pack with regard to their battery IPR/chemistry but are significantly behind in manufacturing design and techniques, which severely impacts on margins. They could be so much more profitable if their manufacturing was up to leading standards.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • bowlhead99
    • By bowlhead99 4th Jul 19, 2:12 PM
    • 9,499 Posts
    • 17,292 Thanks
    bowlhead99
    Tesla as a car company are quite flashy and impressive and will help people come around to the idea of electric cars. That can only be a good thing for the industry. However the people blazing a trail proving a concept are not always the ones who emerge the winners.

    If I were buying TSLA shares I would not be doing it because they proved they could make an $88,000 car (before options, taxes, and the essential $8000 battery upgrade to get an extra 50 mile range) which has popular appeal in certain affluent and built-up West coast or East coast US cities. I would be looking at the "first mover advantage" in battery tech which they can use to supply other car companies or to supply non-car demand (trucks, buildings). In the old California gold rush it was the people selling picks and shovels and denim workwear that prospered more reliably than mine operators.

    Newbinvestor suggests they are years ahead of the game and they have an excellent and easily available super charger network. Still, if you live in Birmingham and are taking the family North to Glasgow or South to Penzance, you're going to need to plan your journey around stopping at a service station and getting on one of the four supercharger points to recharge while you take a bathroom break. If one's not available, wait until it is, because you can't go to the toilet or someone else will get in the queue ahead of you and grab the charger for half an hour while they fuel their kids with burgers.

    At the moment with only a few thousand Teslas in the UK, there are, relatively, a lot of charger points per person even if they are a pain to drive to and not all super-charger speed, some would say not to worry about the infrastructure as it will keep up. But if the roads had tens of thousands more Teslas bought with an expectation of a cheap supercharger every time you stop at a shop or service station, but you check the app and the next three service stations have bookings... really the fuelling network needs to keep up or people won't be spending their ££££ to buy the dream. It's far from a fait accomplis.

    An expensive car with a 250mile range is fine in San Francisco where they are wealthy and love the environment or DC where they have 10,000 person per square mile population density to encourage lots of charging points. In a Texas county with 0.1 population per square mile and four 'tankfuls' needed to cross the state from one side to the other, it's not as viable. The UK will be somewhere between the two but will likely be more EV friendly than eg France or Spain with longer distances to drive and lower road density.

    Being '5 years ahead of the game' as newbinvestor mentions is something that can bankrupt you while you wait for the game to catch up. There are many failed businesses who lament '... well, in some sense, I guess we were ahead of our time...". Tesla hopes to be far enough ahead to be the first name on everyone's lips while not so far ahead that people see them as just a 'nice idea' expensive concept car.

    Cloud_dog is right that they have potential as an auto maker if they would improve their manufacturing. Getting on top of reliable production is something that could enhance earnings so that the price to earnings ratio wasn't so sky high. But in the meantime the investment value seems to be in the power space rather than the cars which showcase it.

    From SMTs perspective, they have already made money on TSLA and have irons in other fires. Really it is just a case of continuing to get early exposure to blockbusting businesses and getting out at a prudent level before they become ex-growth, while avoiding too many failures. Seems like the holy grail which managers aspire to deliver but most don't make. With a concentrated portfolio, SMT share price could easily see a 50-75% drop in sterling terms during a global stock crash in which GBP appreciates and the share price moves to a discount against NAV.
    • Thrugelmir
    • By Thrugelmir 4th Jul 19, 6:07 PM
    • 65,368 Posts
    • 57,525 Thanks
    Thrugelmir
    Their own super charger network which is now easily available around the UK.
    Originally posted by newbinvestor
    Only usefull if you can afford a Tesla. Alternative networks are available. All of Tesla's technology is open source. Remember how much better Betamax was. Yet VHS won the battle. Open source was the downfall of Lotus.

    As an aside issue. A comprehensive charging network is as yet a pipe dream. 8 charging points in a motorway service station isn't going to keep the nation on the move.
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
    • grnglide
    • By grnglide 4th Jul 19, 7:54 PM
    • 162 Posts
    • 63 Thanks
    grnglide
    Open source was the downfall of Lotus.
    I don't think I have come across an open source car before???
    • Thrugelmir
    • By Thrugelmir 4th Jul 19, 9:20 PM
    • 65,368 Posts
    • 57,525 Thanks
    Thrugelmir
    I don't think I have come across an open source car before???
    Originally posted by grnglide
    You've never lived then. Europa was my personal favourite.
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
  • archived user
    Only usefull if you can afford a Tesla. Alternative networks are available. All of Tesla's technology is open source. Remember how much better Betamax was. Yet VHS won the battle. Open source was the downfall of Lotus.

    As an aside issue. A comprehensive charging network is as yet a pipe dream. 8 charging points in a motorway service station isn't going to keep the nation on the move.
    Originally posted by Thrugelmir
    Assuming that you are talking about the spreadsheet, I thought that Excel (Microsoft Excel not the Lotus Excel) was the reason for the downfall of Lotus 123.
    • londoninvestor
    • By londoninvestor 4th Jul 19, 9:28 PM
    • 1,335 Posts
    • 1,176 Thanks
    londoninvestor
    Assuming that you are talking about the spreadsheet, I thought that Excel (Microsoft Excel not the Lotus Excel) was the reason for the downfall of Lotus 123.
    Originally posted by Economic
    Not literally open source, but in the general field concerning the extent to which software intellectual property is protected by law:

    https://en.wikipedia.org/wiki/Lotus_Dev._Corp._v._Borland_Int%27l,_Inc.

    The Lotus decision establishes a distinction in copyright law between the interface of a software product and its implementation. The implementation is subject to copyright. The public interface may also be subject to copyright to the extent that it contains expression (for example, the appearance of an icon). However, the set of available operations and the mechanics of how they are activated are not copyrightable. This standard allows software developers to create competing versions of copyrighted software products without infringing the copyright.
    by Wikipedia
    A victory for Lotus in this case would have cemented its incumbency advantage and given it a substantial moat against competing spreadsheets, because competitors would have had to avoid a resemblance to 123, and so would have been less attractive to existing 123 users.
    • iglad
    • By iglad 11th Jul 19, 4:38 PM
    • 191 Posts
    • 50 Thanks
    iglad
    it would appear all the the questioning of SMT has seen a nice spurt in the share price over the 7-8 days or so, which has doubled my return. I'm quite happy to hold for the long term as I can see returns being made. I finally sold my Fidelity China as I was bored with staring at a loss and the money has now gone into LTG & FS, who should give me some steady returns.
    Last edited by iglad; 16-07-2019 at 10:59 PM.
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