Scottish Mortgage Exits Tesla After $6.2 Billion Realized Gain

The U.K.-listed Scottish Mortgage Investment Trust sold its final Tesla shares in April, ending a 13-year holding that generated about $6.2 billion in realized gains on roughly $470 million invested. Baillie Gifford, which manages the trust, was once among Tesla’s largest outside investors. It also reduced its SpaceX position as that holding became a smaller share of its assets.

Lawrence Burns, a portfolio manager for the trust, described Tesla’s share price as reflecting most of the company’s potential in autonomous driving and robotics. Scottish Mortgage had characterized those businesses as early-stage in July and pointed to intensifying competition in Tesla’s core auto business, particularly in China.

SpaceX represented more than one-quarter of the trust’s assets at June-end, 15% on Sept. 30 and 11.1% as of Nov. 4. The trust began investing in SpaceX in 2018 with an initial commitment of about $200 million. By July, its stake was valued at about $5 billion, roughly 25 times that initial commitment.

Burns linked the SpaceX sales to lockup periods expiring and the holding growing to an unusually large portion of the portfolio. SpaceX remained the trust’s largest contributor to performance over the six-month period, adding eight percentage points. The trust’s net asset value total return was 31.5%, compared with 16% for the FTSE Global Index.

Some proceeds from reducing SpaceX went toward repaying borrowings. The trust’s net gearing fell to 4.3% from 11%, a change it attributed to both debt repayment and gains in its holdings.

The trust also increased its Nvidia position, which represented 6.2% of assets on Sept. 30. Anthropic accounted for 4% on that date; its holding value was about four times the March-end level after a 260.2% gain over the six-month period. The trust also added positions in SK Hynix, KLA, DISCO, Vistra, EQT, Hadrian and Chai Discovery.