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We’re in the final quarter of the year and the FTSE 100 is on course to end 2026 positively. As I type, it’s up almost 6%, with dividends adding to the return.
However, Scottish Mortgage Investment Trust (LSE:SMT) is beating that hands down. Year to date, it has jumped 37.4%, even hitting a record of 1,651p this week.
What’s been sending the growth trust soaring? And is the stock still worth mulling over?
What’s up?
There have been a few positive developments helping boost Scottish Mortgage. For a start, the Nasdaq 100 and S&P 500 indexes have also hit record highs this week, driven on by tech stocks.
The Footsie trust holds a plethora of Nasdaq-listed shares, including Amazon, Nvidia, SpaceX, Meta, and ASML. So this has undoubtedly helped.
Another is Moderna, the S&P 500’s second-best performer this year, up a massive 528%. This back-from-the-dead performance has seen it climb into Scottish Mortgage’s top 10 holdings for the first time in years.
Latin American e-commerce giant MercadoLibre has also jumped higher in recent days. This comes after pro-business candidate Flávio Bolsonaro secured a leading position in the first round of Brazil’s presidential election.
Top holding SpaceX has also climbed 59% since early August. Scottish Mortgage has been trimming this position recently, but it remains a core holding because the managers are bullish due to rapidly falling launch costs.
As that launch cost continues to fall to the hundreds of dollars, you start to unlock multiple Starlinks. You move into having compute and data centres in orbit. Defence applications become numerous. When you take a step back…SpaceX is in effect a near monopoly on the access to the rest of the universe.
Manager Lawrence Burns.
There’s never been a company in the stock market with a near monopoly on access to the rest of the universe. When a business model is this unique and powerful, it’s well worth considering investing long term, in my view.
That’s why I’ve bought SpaceX shares, though they’re risky due to a high valuation and lofty expectations. If these aren’t met, the stock could sell off aggressively, hitting Scottish Mortgage’s net asset value (NAV) in the process.
Another holding that’s driving value is Anthropic. The AI lab behind Claude is gearing up for a record-breaking $2trn IPO. If achieved, this would represent a more than doubling in the value of Scottish Mortgage’s stake!
That said, Anthropic’s IPO prospectus says that advanced AI could pose “catastrophic or existential risks to humanity”. That’s a slightly more dramatic risk factor than adverse foreign exchange movements!
Still worth a look?
Obviously the fact that US markets are at record highs adds some risk as a pullback could be round the corner. There’s also a chance the Anthropic IPO bombs, dragging other AI stocks like Nvidia and SpaceX down too.
However, Scottish Mortgage is still trading at a 10.8% discount to NAV. Given the underlying quality of the portfolio, which also includes Revolut and Shopify, I think the stock is still worth considering for the next decade.
I already have a large holding, so I’m content. But if Scottish Mortgage comes under pressure after the Anthropic listing, I might take the opportunity to snap up a few more shares.
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Ben McPoland owns shares in MercadoLibre, Nvidia, Scottish Mortgage, Shopify, and SpaceX.
This story originally appeared on Motley Fool
