Investment trust insider on Schiehallion – James Carthew: What to look out for in expensive Schiehallion’s annual results
Baillie Gifford’s Schiehallion Fund (MNTN) is approaching the third anniversary of its listing. It should also be about to publish its results for the 12 months ended 31 January. There are a few things to look out for.
MNTN’s focus is on taking minority (sub-20%) stakes in late-stage private businesses; a segment of the market that we would normally call pre-IPO (initial public offer), but part of the rationale for the fund is that companies are floating on stock markets later in their development and some attractive businesses are choosing not to float at all. If they do list, MNTN is free to continue to hold them and may even add to its position. It will not buy a new position in a listed stock, however.
Late-stage does not necessarily mean profitable, but companies should have a valuation of at least $500m (£381m). These are the sorts of high-growth businesses whose valuations have been hit hard by the prospect (now reality) of rising interest rates.
MNTN raised $477m at launch, helped by a significant investment from a number of North American pension funds including the Florida Retirement Trust Fund, which remains the largest shareholder. MNTN’s shares trade on the London Stock Exchange’s specialist fund segment.
MNTN’s shares have traded at a significant premium to asset value from the outset. Investors’ faith in the company was not shaken by the Covid-19 induced panic in March 2020. The premium dipped towards 10% in December of that year but rose again thereafter and hit over 60% around the end of 2021. This was unsustainable and the share price, net asset value (NAV) and premium have all… read more here