Baillie Gifford's Flagship Trust Exits Facebook, Trims Amazon in US-China Tech Shift
November 06 2020 - 8:37AM
Dow Jones News
--Scottish Mortgage Investment Trust sold its remaining holding
in Facebook, and trimmed its stakes in Amazon and Tesla
--The FTSE 100 trust increased its holdings in Chinese companies
as its investment manager Baillie Gifford expands in China
--Scottish Mortgage didn't comment on the suspension of the
planned IPO of Ant Group, which was set to boost the value of its
holding in the Chinese company
By Adam Clark
Scottish fund manager Baillie Gifford & Co.'s most prominent
investment trust has sold its holding in Facebook Inc. and reduced
its stake in Amazon.com Inc., as it looks beyond major U.S.
technology companies and increases its presence in China.
Baillie Gifford's Scottish Mortgage Investment Trust PLC said
Friday that it had exited Facebook in the six months to Sept. 30,
after cutting its stake to 0.5% of its total assets as of the end
of March. The social-media platform was previously one of Scottish
Mortgage's long-term top-10 holdings but has been progressively
trimmed since 2018.
The FTSE 100 trust also cut its holding in Amazon, noting it was
the first time it had sold shares in the online-retail platform for
reasons other than diversification. Amazon fell to 7.9% of the
trust's total assets from 9.3% over the six-month period.
"Whilst we have huge respect for Amazon's vision and ability to
execute, its starting capitalization of over $1.5 trillion makes
the path to large future returns more challenging," Scottish
Mortgage said.
Edinburgh-based Baillie Gifford has become known for
specializing in long-term investments in fast-growing companies,
most famously Tesla Inc. Despite Scottish Mortgage selling 1.18
billion pounds ($1.54 billion) worth of shares in Tesla during the
period, the electric-vehicle maker remains the trust's largest
holding at 12% of total assets, with a fair value of GBP1.85
billion.
Scottish Mortgage said Friday that it was seeing increasing
opportunities to "invest in digital businesses of scale beyond the
giant western platforms." Baillie Gifford opened an office in
Shanghai in September and said it intends to launch private funds
to Chinese investors.
Chinese companies now comprise four of Scottish Mortgage's
top-10 holdings, namely Alibaba Group Holding Ltd., Tencent
Holdings Ltd., Meituan, and NIO Inc. Chinese assets comprised 22.5%
of the total portfolio, up from 21.2% at the end of March. U.S.
assets dropped to 52.1% from 53.9% over the same period.
Scottish Mortgage didn't comment on the recent surprise
suspension of Ant Group Co.'s planned listing, despite the Chinese
financial-technology company representing 1.8% of its portfolio.
The pricing of that initial public offering had boosted the fair
value of the trust's holding in Ant to GBP353.1 million from
GBP286.4 million, before Chinese regulators blocked the record
float earlier this week.
Overall, Scottish Mortgage reported a 76% rise in its net asset
value over the six-month period, to 992.0 pence a share from 565.7
pence.
Shares at 1249 GMT were down 0.6% at 1,073.50 pence, giving the
trust a market value of GBP15.68 billion. The stock has more than
doubled over the last year, making it the single best performer in
London's FTSE 100 index of large companies.
Write to Adam Clark at adam.clark@wsj.com
(END) Dow Jones Newswires
November 06, 2020 08:22 ET (13:22 GMT)
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