Elliott Associates, the much feared and respected US activist hedge fund, has emerged with a 5% stake in Scottish Mortgage Trust (SMT ).

In a post-market disclosure to the stock exchange, the Delaware-based investment firm revealed it had bought nearly 0.5% of the Baillie Gifford flagship’s shares with a further 4.57% in equity swaps to take it just over the 5% threshold.

Founded in 1977 by Paul Singer, Elliott is best known for buying distressed emerging market bonds and pursuing Peru and Argentina through international courts when they defaulted on their debts. Closer in time and space, last month it made a takeover approach to electrical retailer Currys (CURY)

In the UK investment company market, the firm is fondly remembered, by most, for its campaign against Alliance Trust (ATST ). After building up a 14% stake in the underperforming global equities fund, it obtained two seats on the board in 2015 before ousting chief executive Katherine Garrett-Cox and starting a process that saw her financial services empire dismantled and the company’s adoption of the multi-manager structure under Willis Towers Watson we know today.

Whether Elliott will mount a similar campaign against the even more widely-held Scottish Mortgage is unclear.

The company will hope Elliott passes by in the manner of activist Saba Capital, which bought and sold a stake last year without challenging the board or its manager Baillie Gifford.

However, the investment trust remains somewhat vulnerable to attack, having seen its impressive performance both before and after the pandemic, disappear in the 2022 growth selloff. Its 26% exposure to unquoted companies has also caused concern and led to the shares falling to a 15% discount.

Nevertheless, Elliott’s timing is strange coming just days after Scottish Mortgage announced a £2bn buyback programme over the next two years, which narrowed the gap between the share price and net asset value to 10%. Elliott may think that’s still enough to make a turn if the discount continues to narrow.

In a good day for US and UK stock markets, buoyed by hopes of a cut in interest rates whose hikes damaged the shares of Scottish Mortgage growth stocks, the trust rose 2.6% to 865p. That’s comfortably off last May’s low of 621p but well below the November 2021 peak of £15.28.