Scottish Mortgage Investment Trust, a London-listed closed-end fund managed by Baillie Gifford, has taken significant profits from two of its most successful long-term investments by exiting its Tesla position entirely and substantially reducing its SpaceX holding [1]. The fund sold its remaining Tesla shares in April 2024, concluding an investment that began in 2013 and generated a remarkable 13-fold return on capital, with approximately $470 million invested yielding roughly $6.2 billion in realized profit over 13 years [1]. Simultaneously, SpaceX represented 11.1% of Scottish Mortgage's total assets as of Wednesday, down from 15% at September 30, marking a significant reduction following SpaceX's June IPO [1].
The portfolio adjustments contributed substantially to Scottish Mortgage's strong half-year performance through September 30, with the fund delivering a 31.5% net asset value return compared to 16% for the FTSE All-World Index, while its share price returned 33.8% [1]. SpaceX alone added 8 percentage points to the trust's returns during the period [1]. Scottish Mortgage first invested in SpaceX in December 2018 when the rocket company had a reported valuation of about $31 billion, committing roughly $200 million through 2021, and the position had grown to represent roughly a quarter of the portfolio by value at the time of SpaceX's IPO [1].
The fund's decision to reduce both positions reflects a disciplined approach to portfolio management despite maintaining high conviction in the companies. Scottish Mortgage stated that "the decision to reduce the position following its flotation, while retaining a substantial investment, demonstrates the importance of balancing conviction with disciplined portfolio management" [1]. The proceeds from SpaceX sales also helped Scottish Mortgage repay borrowings and reduce gearing [1]. The fund's management emphasized that while Tesla's share price had come to reflect much of its promise, the company's exceptional long-term performance justified the exit strategy [1].
CONCLUSION
Scottish Mortgage Investment Trust's exit from Tesla and reduction of SpaceX holdings represent disciplined profit-taking from two extraordinarily successful long-term bets, with Tesla generating a 13-fold return and SpaceX contributing significantly to the fund's 31.5% half-year NAV return. The moves demonstrate how early-stage venture investors manage positions through major liquidity events while maintaining conviction in underlying businesses. These actions suggest the fund's managers believe valuations have substantially reflected the companies' growth prospects, though the retention of an 11.1% SpaceX position indicates continued confidence in the space company's trajectory.