Scottish Mortgage Swaps Buybacks for Share Sales as Demand Surge Erases Discount

Scottish Mortgage Investment Trust shifts from buybacks to share placings after 27.4% NAV return, driven by SpaceX's IPO filing and AI infrastructure bets.

The trust that spent years hoovering up its own stock to contain a persistent discount has executed an abrupt about-face. Scottish Mortgage Investment Trust has twice issued new shares this month — 2.4 million at 1,466.46 pence on 20 May followed by 2.1 million at 1,432.43 pence on 8 May — as investor demand pushed the shares to a premium over net asset value. The shift from repurchases to placings is the clearest signal yet that the market’s mood has turned decisively.

The catalyst is a powerhouse performance. For the year ended March 2026, Scottish Mortgage delivered a NAV total return of 27.4%, comfortably outpacing the FTSE All-World Index’s 18.0%. The share price rose 26.8%, returning to the level last seen in November 2021. In euros the stock now trades at 17.76, up 28% since the start of the year, and carries an estimated premium of 6.3% — a far cry from the 9.5% discount that weighed on the trust at its year-end.

SpaceX looms large as dual monopoly

The dominant engine of that revival is SpaceX. The private rocket company remains the trust’s largest holding, representing 19.3% of the portfolio and worth roughly £3bn. Manager Tom Slater frames it as a “dual monopoly” — dominant in launch services on one side and, via Starlink, in high-margin, subscription-style satellite connectivity on the other. The original outlay of about £150m has ballooned. With SpaceX having filed for an initial public offering in April and a June 2026 listing penciled in, Slater has made clear that Scottish Mortgage will retain its stake after the float.

AI infrastructure and private markets get fresh capital

Artificial intelligence has also been a powerful tailwind. The trust leans into the physical and compute-intensive layers of the AI buildout, with heavyweight positions in TSMC, ASML and Nvidia delivering substantial gains. New additions to the equity portfolio include the AI developer Anthropic, whose annualised revenue exploded from $1bn in January 2025 to over $30bn in just fifteen months, as well as AppLovin, MongoDB and Chinese AI start-up MiniMax.

Beyond listed names, Scottish Mortgage has aggressively expanded its private-market exposure. The board secured shareholder approval for an additional £250m allocation to unlisted investments. In the past fiscal year the trust poured £254m into private companies — nearly double the prior year’s figure. New holdings include health-tech firm Loyal Animal Health and the Chinese social platform RedNote, while existing stakes in Enveda, Redwood Materials and Zipline received follow-on funding. Management also flags ByteDance, Stripe and Databricks as likely IPO candidates among its unlisted holdings.

Gearing, costs and the dividend marathon

Investment profit for the year reached £3.15bn, more than double the £1.27bn reported a year earlier. The trust’s ongoing charges stayed flat at 0.33% while gearing eased from 13% to 11%. The dividend was raised 4.3% to 4.57 pence per share, marking the 43rd consecutive year of increases. Assets under management climbed to £13.82bn from £12.08bn.

China missteps and portfolio adjustments

Not every bet paid off. Meituan was one of the weakest holdings, hurt by shifting dynamics in China’s on-demand economy. In response, managers added positions in CATL, the battery giant, and RedNote. The trust’s annual general meeting is scheduled for 2 July 2026 at the National Galleries of Scotland in Edinburgh, where shareholders will have the first formal opportunity to challenge or applaud the new strategic direction.

With the discount erased, the share issuance machine running and the SpaceX IPO approaching, Scottish Mortgage enters the summer at a level of market enthusiasm not seen in four years — and with a balance sheet that finally reflects it.