Scottish Mortgage Investment Trust has sold its last Tesla shares and cut its SpaceX holding. The Baillie Gifford-managed fund cited a 13-fold return on Tesla and said its conviction in SpaceX remains high.
Scottish Mortgage Investment Trust, a London-listed closed-end fund managed by Baillie Gifford, sold its remaining Tesla stake in April, ending an investment that dated back to 2013. The fund also reduced its SpaceX position, taking profits from two of its most successful long-term bets.
Tesla returned 13 times the capital invested
In a July portfolio update, the fund said it had invested around $470 million in Tesla and generated approximately $6.2 billion in realized profit over 13 years. However, the trust felt the share price had come to reflect much of the company's promise. According to Scottish Mortgage: "the share price had come to reflect much of its promise".
The trust also pointed to intensifying competition in Tesla's core automotive business, particularly in China.
Tesla and SpaceX shares then fell about 11% and 9%, respectively, on Thursday, according to CNBC. The two stocks' combined market value dropped more than $420 billion below Tuesday's close. Investors fear Elon Musk could face new congressional probes after the U.S. midterms, potentially exposing his companies to tighter regulation.
SpaceX stake shrinks after the IPO
SpaceX represented 11.1% of total assets as of Wednesday, down from 15% at Sept. 30. By the time of its June IPO, SpaceX had made up roughly a quarter of the portfolio by value.
The trust has since sold shares as post-IPO lock-up restrictions have lifted in stages. Proceeds also helped it repay borrowings and reduce gearing.
SpaceX added 8 percentage points to returns in the six months to the end of September. The trust's net asset value delivered a total return of 31.5% over that period, compared with 16% for the FTSE All-World Index.
Source: CNBC
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