Interactive Investor

Scottish Mortgage explains two new holdings

16th April 2021 14:33

Tom Bailey from interactive investor

Scottish Mortgage expands its exposure to the ‘space exploration’ theme. 

Scottish Mortgage (LSE: SMT) has unveiled two new investments in its portfolio. In an update to investors, co-manager Tom Slater explained why the trust recently invested in aerospace manufacturing firm Relativity Space and payments platform Adyen (EURONEXT: ADYEN).

Relativity Space is a private company that manufactures rockets. According to Slater, one of the key attractions is their use of 3D printing, which should allow the company to produce cheaper rockets. Slater says: “they’re using new manufacturing techniques, so additive manufacturing or 3D printing to build rockets, again bringing the cost down maybe for smaller cargo volumes but addressing this really large pool of demand that is being unlocked by lower prices”.

This investment sits alongside other ‘space exploration’ theme holdings in the portfolio. Scottish Mortgage has a large holding in Elon Musk’s SpaceX, which is also unlisted. In the update to investors, Slater also said that he saw this company driving down the costs of space travel. He noted: “They’re driving down the cost of access to space and not just incrementally but by orders of magnitude. As you lower the dollars per kilogram of cargo into space, you open up huge new applications which are potentially really interesting.”

Slater argued that cheaper space flight costs should open up all sorts of applications, including allowing telecoms companies to move away from mobile phone masts to satellites. Slater says the company helps big global retailers that need to process large volumes of transactions from around the world, giving the example of McDonalds. He said: “If McDonalds want to take payments in lots of different countries, if it wants the online channel, the huge volume of transactions, it needs some pretty powerful tools that have a level of complexity you don’t see for the small retailer. We think Adven is doing a really great job of providing.”

Slater is currently the co-manager of Scottish Mortgage, alongside James Anderson. However, it was recently announced that Anderson plans to retire in 2022, leaving Slater as the principal manager of the trust.

Commenting on the news, Teodor Dilov, a fund analyst for interactive investor noted:  “The recent activity in portfolio sends a clear signal that Tom Slater is not planning to shift from the existing investment philosophy of the trust and will continue backing disruptive businesses that have huge upside potential.

“This is also Tom’s first appearance as a lead figure following the announcement that the trust’s mastermind James Anderson will be retiring next year and could further calm down investors’ concerns over the succession.”

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