Scottish Mortgage’s Premium Share Sales Signal a Strategic Pivot as Cyber Risks and SpaceX IPO Loom

Scottish Mortgage shifts from £3B buybacks to premium share issuance as NAV surges 27.4%; discounts decline; cybersecurity risk rises; SpaceX IPO eyed.

The Scottish Mortgage Investment Trust has turned a corner. After spending heavily on share buybacks to defend its market price against a stubborn discount to net asset value, the trust is now doing the opposite: issuing new shares at a premium. The shift, detailed in the annual report published on 1 June for the year ended 31 March 2026, marks a fundamental change in capital allocation and risk perception.

Investor demand has snapped back. In late May, the trust placed 2.85 million treasury shares at 1,521.59 pence each on 29 May, following a 1.15 million-share placement at 1,502.02 pence a day earlier. Both transactions were executed above the prevailing NAV, a sign that buyers are willing to pay more than the underlying asset value. The momentum continued in June with another 2.35 million shares placed at 1,516.50 pence on 1 June, and a further 3.85 million at 1,545.42 pence shortly after. The stock now trades at €18.23 in euros, up roughly 31% year to date and just 3.3% below its 52-week high of €18.85.

That rebound follows an aggressive buyback campaign. In the fiscal year just ended, the trust spent £1.31 billion repurchasing 122.9 million of its own shares, and over the past two years the total buyback bill reached £3.02 billion for 307.7 million shares – equivalent to about 22% of the capital outstanding in March 2024. The intervention appears to have worked: the board now rates the discount risk as “declining and moderate”, down from “high” in previous assessments. Gearing has fallen to 11%.

Yet the risk landscape is shifting elsewhere. The trust has flagged cybersecurity as a “moderate and increasing” threat, citing potential attacks on its manager Baillie Gifford or third-party service providers that could compromise confidentiality, system integrity or availability. Operational risk remains “high but stable”, tied to the long-term growth strategy and the concentrated exposure to unlisted companies.

The portfolio performance underpins the renewed confidence. NAV returned 27.4% over the reporting period, handily beating the FTSE All-World Index’s 18%. The board credits operating growth at core holdings and a stabilisation of valuations in private companies. Over ten years, the NAV has compounded at 435.2% against the benchmark’s 233.9%, explaining why the trust retains a loyal retail following that has helped push it to the top of Interactive Investor’s buy list for three consecutive months.

All eyes now turn to the long-anticipated SpaceX IPO, expected on 12 June with a reported valuation of $1.75 trillion. About 30% of the offered shares are reserved for retail investors. For Scottish Mortgage, SpaceX has been a major but illiquid portfolio weight; a public listing would bring daily pricing and greater transparency, while also exposing the position to market volatility. The trust reported an unaudited fair NAV of 1,428.71 pence per share on 29 May, and the stock opened at 1,536.50 pence on 2 June.

The annual general meeting on 2 July will test shareholder appetite for the new strategy. Among the resolutions is a proposal to raise the cap on unlisted holdings above the current 30% threshold, a move that would allow the trust to lean further into private markets. Also up for vote are a new buyback authorisation of up to 14.99% of issued shares – but only when the price falls below NAV – and a final dividend of 2.97 pence, bringing the full-year payout to 4.57 pence, up 4.3% and marking the 43rd consecutive year of dividend growth.

With the discount reined in and a premium emerging on new issues, Scottish Mortgage is navigating a delicate transition. The next test will be how its revamped risk framework holds up when the largest private bet in the portfolio becomes a publicly traded headline overnight.