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Expert Investment

Washington H Soul Pattinson (SOL) name is possibly misleading. Many investors associate the name with the chain of chemist shops. This represents its origins, but it is now much more. Essentially SOL is an investment vehicle with an impressive track record.

The SOL portfolio is broad. It contains cash, term deposits, property, shares, energy and related assets, copper and gold holdings. SOL also provides corporate advisory services. One of its share holdings is a controlling interest in Brickworks, and Brickworks holds a similar stake in SOL. This structure has been criticised. However one effect is that it is very difficult for a hostile bidder to remove the existing management team.

In 1998 SOL shares hit a low at (the equivalent of) $2.22 (there was a share split in 2002). While there are fluctuations over the years, the quarterly chart shows a rise over the intervening years to the all-time high at $19.00 in June this year.

So this is a structurally stable investment group with a strong track record – at least judging by the long term share price rise. The daily chart (pictured) shows a significant pullback from the highs. Some of this share price pressure due to activist shareholders agitating for a change in the cross-shareholding, and the stock is now ex the November dividend. It’s now trading nearer an important support level at $15.75.

A challenge for many investors is the narrowness of their portfolios. While this often reflects a cautious approach, selecting only higher quality investments one at a time, it ironically means there is higher risk due to the larger exposures to single stocks. Investors looking to draw on long established investment expertise, and wish to diversify to reduce portfolio risk, could have SOL on the radar.

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