Scottish Mortgage (SMT) has a ‘moral obligation’ to continue to buy back shares at a 6% discount following last week’s record one-day £311m stock repurchase, says Investec analyst Alan Brierley.
Scottish Mortgage’s prime target in the 8 May transaction appears to have been halving the 5% stake of activist hedge fund Elliott Management, which disclosed its position a week after the £12bn global equities trust launched a two-year share buyback programme in March.
However, Brierley and fellow analyst Ben Newell believe the Baillie Gifford flagship should take a leaf out of the book of Alliance Trust (ATST), for which Investec is the corporate broker and which faced a similar challenge from Elliott seven years ago.