The Scottish Mortgage Investment Trust PLC (LON: SMT) share price has risen 5.63% in the past week, driven by positive investor sentiment. The investment trust has not made any new announcements to which we could attribute the recent rally apart from the positive sentiment.
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The fund has underperformed some peers, such as the Blue Whale Growth or Sanlam Global Artificial Intelligence funds. These funds have generated double-digit returns for investors this year, driven higher by the massive rally witnessed in high-tech growth stocks.
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While SMT holds multiple high-growth stocks that have rallied higher, such as Tesla, Nvidia, ASML and Amazon, it also holds some stocks that have performed poorly, including Chinese e-commerce stock Meituan, its 12th largest holding, and Moderna, its top holding.
Therefore, while there is some fundamental logic behind why SMT shares have performed poorly so far, that is only part of the reason. Investor sentiment towards the company has soured significantly, given that it was trading at a 17.8% discount to its net asset value (NAV) earlier this month.
The discount to its NAV is driven by investors' lack of confidence in the trust. Hence, many have sold their shares, leading to a decline in SMT shares since the year began. The question remains: Will SMT shares ever rally again to reach their previous highs?
The short answer is that we can only know once the recovery happens, so I am excited about the recent rally of an intermediate-term support level. The rally has no other triggers besides positive investor sentiment towards the company.
Furthermore, the discount at which SMT shares are trading could signal a lack of confidence in the current team of co-managers at SMT after the departure of long-serving manager James Anderson in April 2022.
Scottish Mortgage is co-managed by Tom Slater, who took over from James Anderson in 2022 and recorded a staggering loss of £10 billion in his first year as lead co-manager. Given his performance last year, Tom has yet to prove himself, which could be why investors have headed for the exits recently.Â
Still, SMT’s outlook is positive if the uptrend continues over the coming weeks.
Scottish Mortgage share price.
The Scottish Mortgage share price has risen 5.63% this week from an opening price of 638.20p on Monday to its current price of 674.15p.
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