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In some cases in the last few years Scottish Mortgage Investment Trust (LSE: SMT) was a stock market darling. From the first and most profitable investment Tesla Despite the strong performance in Scottish mortgage share prices, the trust’s performance looks excellent.
But things have been going well of late. Scottish mortgage shares have lost 40% of their value in the past year. So does that make them buy for my portfolio?
Price and value
The first thing to note is that just because a share is cheap does not in itself make it a good value. You can always find something cheaper. Even Cheap. So I don’t just look at the price per share. In other words, I focus on what I think should be worth it.
Investors in a trust like Scottish Mortgage know what the shares are technically worth at any given time because it publishes the net asset value of their holdings. Currently, Scottish Loans’ share price trades at a discount of approximately 10% to net asset value.
In itself, that doesn’t mean I think it’s a good price. The trust owns shares in unlisted companies like SpaceX, so determining their value is often an inexact science. So are the stock prices of companies you trust. Price. They also may not reflect the full value of companies. Tencent And Modern.
To make sure that investing in the trust is really worth it, I need to look at the list of companies he owns (it’s on the website). Then I can drill down into those businesses and see if their future potential is fully reflected in the price they’re trading today.
How to value Scottish loan shares
Looking at the trust’s portfolio, I see some stocks that I think are undervalued. He invested heavily in tech stocks, many of which had fallen in value. But I think the long-term interest in some of the key technology platforms that Scottish Mortgage has invested in will grow.
On top of that, it gives me exposure to a portfolio approach that has a track record of Scottish Mortgage success. That’s no guarantee of what happens next, and the longtime investment manager stepped down this year after decades in the role.
But I think Scottish Mortgage’s repeated success in identifying compelling growth stories at their earliest stages reflects more than a single minded effort. The tech crash has certainly taken a toll on Scottish mortgage share prices. But the skill of faith, investing in the next big thing, continues to draw me to it.
My step
At current prices, I think these stocks could provide good value for my portfolio. I like the exposure that Trust gives me to many stocks in different industries, many of which have promising outlooks.
As a long-term investment believer, I would be happy to take advantage of the fall in prices to buy Scottish loan shares for my portfolio today and hold them for years.