Scottish Mortgage sells out of Facebook and trims Amazon and Tesla stakes

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Scottish Mortgage Investment Trust PLC (LON:SMT) said in the first half of the year it sold out totally from Facebook and trimmed its stake in Amazon based on a more challenging outlook for returns.

The FTSE 100-listed investment trust recommended a modest interim dividend of 1.45p as it generated £6.4bn of capital gains on investment in the half-year to September 30.

Net asset value per share ended September at 999.8p, up from 567.3p a year earlier as the trust hit the £10bn mark as it rode a huge wave of momentum in tech stocks, an area in which the trust has focused its portfolio for many years.

Tesla, which the trust first bought in 2013, is the largest holding, even though more than 40% of its stake was sold during the period, raising £1.18bn, to ensure that the portfolio has an appropriate level of diversification.

As well as completely selling its shares in Facebook, the investment company’s manager, Baillie Gifford, made the first reduction to its Amazon holding that was not driven by diversification concerns.

“Whilst we have huge respect for Amazon’s vision and ability to execute, its starting capitalisation of over $1.5trn makes the path to large future returns more challenging,” the trust said in the interim statement.

But other winners emerged in the pandemic, including US-listed furniture retailer Wayfair and food delivery companies Meituan in Chain and Delivery Hero in Europe.

Electrification remains a theme about which the trust’s manager are keen, with a new investment made in the period in Sweden’s Northvolt and a commitment to invest in California-based ChargePoint, adding to Chinese electric vehicle producer Nio.

“Technological progress is driving down costs along an exponential curve that the fossil fuel industry will be unable to match. It is challenging to predict the impact of such change on the complex system that is the global economy. We eschew prediction and prefer to partner with the entrepreneurs that are driving change,” the trust said.

Pronouncing on the recent period like a true investment guru, another pronouncement was that “we must avoid the temptation to match outcomes with easy or obvious explanations….The oddities of the pandemic will fade, some long-running shifts in our economy will have been accelerated and the stresses we have experienced will spark new waves of innovation.”

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