Scottish Mortgage Blends Record NAV Growth with Tactical Share Issuance as SpaceX Stake Drives £3.1bn Profit

Scottish Mortgage issues £37.9m in shares at 7.8% premium above NAV, reversing buyback strategy as SpaceX stake drives 27.4% NAV growth and portfolio reaches 19%.

Scottish Mortgage Investment Trust has put its capital management playbook on display, issuing shares from treasury at a premium to net asset value just months after completing a £1.3bn buyback binge. The move comes as the trust reports a 27.4% surge in net asset value for its financial year, powered largely by its outsized bet on SpaceX — a holding that now accounts for more than 19% of the portfolio.

The trust placed 2.5 million treasury shares at 1,515 pence each, raising gross proceeds of £37.875 million. The issuance price represented a 7.8% premium over the cum-fair NAV of 1,405.31 pence — the sweet spot for existing shareholders, as no dilution occurs when a trust sells above asset value. Following the transaction, Scottish Mortgage still holds 375,864,074 shares in treasury, while the issued share count excluding treasury rose to 1,108,916,806.

The decision marks a sharp reversal from the prior strategy. During the financial year ended 31 March 2026, the trust was grappling with a widening discount that stretched from roughly 9.0% to 9.5%. Management responded by repurchasing 122,884,921 shares at a total cost of £1.3118 billion. No treasury shares were sold in that period. Now, with the stock trading at a premium — the mid-week closing price of 1,515 pence stood 7.5% above the fair value NAV of 1,409.70 pence — the trust is tapping demand rather than defending the discount.

SpaceX and the NAV engine

The underlying performance justifies the shift in sentiment. For the year to 31 March 2026, Scottish Mortgage’s NAV per share rose 27.4%, while the share price climbed 26.8% — both easily outpacing the FTSE All-World Index’s 18% advance. Net profit after tax ballooned to £3.1 billion from £1.2 billion a year earlier, and equity reached £13.8 billion.

SpaceX was the single largest contributor. The Elon Musk-led rocket and satellite company swelled to over 19% of the portfolio, driven by the rapidly growing Starlink broadband business. After the year-end, SpaceX reportedly filed for an initial public offering, adding a potential catalyst for further gains. The trust continues to tilt toward long-duration themes — AI infrastructure, digital finance and healthcare innovation — with significant stakes in both public and private markets.

Gearing stood at roughly 11% at year-end, down from 13% a year earlier, with average borrowing costs of about 3.6%. Ongoing charges remained contained at 0.33%, and no performance fees were incurred.

Dividend streak and private equity pivot

Investors received their 43rd consecutive annual dividend increase: 4.57 pence per share, up 4.3%. The payout remains modest relative to the trust’s capital appreciation, but the unbroken record underscores Scottish Mortgage’s commitment to returning cash even as it prioritises growth.

Shortly after the fiscal year closed, the board approved a £250 million expansion of the trust’s private equity mandate — a targeted but deliberate increase to capture opportunities in unlisted companies. This sits alongside the trust’s already substantial exposure to privately held names such as SpaceX.

Market reaction and outlook

Shares responded modestly on Thursday, falling as much as 2.04% to €17.50 in early trading before recovering to €17.62, still down 1.40% on the day. The year-to-date gain stands at 26.03%, nearly matching the NAV performance. The stock hit a 52-week high of €18.85 on 25 May.

The issuance itself is small — just 0.23% of the post-transaction share count — but carries a clear signal. Scottish Mortgage is no longer in defensive mode. With the premium intact, management can dribble out more treasury shares to meet demand, generating liquidity without harming long-term holders. Should the premium evaporate, the board has already demonstrated its willingness to pull the buyback lever once again.