Washington H. Soul Pattinson and Co (ASX:SOL): Australia’s closest comparable company to Berkshire Hathaway

There can only be one Berkshire Hathaway, but the closest company to it is Washington H. Soul Pattinson and Co (ASX:SOL). Sure, there are investment houses out there, but few lack the track record and history of this company. 

Introduction to Soul Pattinson

Soul Pattinson had humble ancestry as a pharmacy store in the 1870s, but the modern company was founded in 1902 when Lewy Pattinson bought out father & son founders Caleb & Washington Soul. It was listed on the Sydney Stock Exchange a year later and claims to be the second oldest company on the bourse.

As we mentioned, it is an investment company owning stakes in several businesses, most notably Brickworks (ASX: BKW) with a stake of over 40%. Other assets include a 12.6% stake in TPG (ASX: TPG), a 25.4% stake in Tuas (ASX: TUA) and a 40% stake in coal miner New Hope (ASX: NHC).

It also has a significant portfolio of private assets which you may hear media reports about from time to time. Some of its investments in recent years include body composition scanning business Evolt360, Pillar Performance – a sports supplement business run by former Waratahs player Damien Fitzpatrick.

One of SOL’s more prominent investments was acquiring Milton Corporation in late 2021. It had previously owned the business in part but acquired the balance that it did not yet own. Since that acquisition was completed, Soul Pattinson reported NAV increased by 13.5% per annum including the reinvestment of dividends. This is 6.4% better than the All Ordinaries Accumulation Index.

Stellar results in FY24

Soul Pattinson follows a August 1-July 31 financial year. In its most recent results, it recorded a pre-tax Net Asset Value of $11.8bn which was 8.7% up in 12 months. Its Net Cash Flow from Investments grew 10.3% from $424.3m to $468m, by 10.3%. And it paid out dividends worth 95cps, up 9.2% from the year before.

That is not the highest yield considering its share price is over $30, but some investors may be pleased with the raw amount per share even if it is low-yielding. Similar to Berkshire Hathaway…it helps when you never raise capital or do stock splits! What’s more is that it has increased its dividends at a CAGR of 15.3% in the last 3 years, whilst the All Ords average is 0.9%.

Soul Pattinson reported deploying $2.8bn in investment and making $4.7bn of total transaction activities. Its profit was 27.8% lower than the year before because of lower dividends from Brickworks and New Hope.

Over the last 20 years, SOL has reported Total Shareholder Return of 11.7% per annum, outperforming the All Ords by 3%. If you’d invested A$1,000 in the company in 2004, you’d now have $9,200 whilst you’d have just $5,340 if you invested in an All Ords ETF.

Since 2000, it has increased dividends by a 9.6% CAGR and has lifted dividends for 24 consecutive years. One more year and it becomes a Dividend Aristocrat! It has also reported paying dividends for 121 years, even through the worst wars and economic downturns of the past century.

For ESG investors, you are covered too. The company has had an 84-year partnership with the Royal Flying Doctor Service and chipped in $735,000 during FY24. It has recently established partnerships with the Black Dog Institute and the George Institute. It recently introduced volunteer paid leave for its staff seeking to help out.

Conclusion

Few other companies have such a track record as Sol Pattinson. Yet you could argue it still has upside, having performed well when financial market conditions have not been ideal. It doesn’t have the cheapest multiple at 35.5x P/E and it is 1.4x Price to Book, although its market cap is a modest $12.3bn.

Expect good things from this one!

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