Warren Buffett is one of the world’s greatest investors, would he be interested in buying shares of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)?
What Is Washington H. Soul Pattinson?
WHSP is an investment house business which has been on the ASX for over a century. Its origins are in owning and operating Australian pharmacies, which is where the Soul Pattinson chemist chain comes from, however, that business is now owned by Australian Pharmaceutical Industries Ltd (ASX: API), which WHSP owns 19.3% of.
WHSP invests in a large number of companies across a variety of industries.
What Are Some Of The Investments That WHSP Owns?
In addition to a large diversified listed and unlisted portfolio, WHSP’s larger investments include 25.3% of TPG Telecom Ltd (ASX: TPM), 50% of New Hope Corporation Limited (ASX: NHC), 43.9% of Brickworks Limited (ASX: BKW), 8.6% of Bki Investment Co Ltd (ASX: BKI), 4.3% of Milton Corporation Limited (ASX: MLT), 43.3% of Ampcontrol Pty Limited, 22.6% of Clover Corporation Limited (ASX: CLV) and 100% of Pitt Capital Partners & Round Oak Minerals.
These investments mean that it’s diversified across natural resources, building materials, telecommunications, retail, agriculture, property equity, investments and corporate advisory.
Anything Else Special About WHSP?
What a lot of investors find particularly attractive about WHSP is its dividend history and stability.
WHSP has been listed on the ASX since 1903 and in this time has never failed to pay a dividend to shareholders.
But it’s the fact that WHSP has grown its annual ordinary dividend each year since 2000, including through the GFC, which provides excellent peace of mind for shareholders.
WHSP funds the dividend payments purely from the regular cashflows from dividends, distributions and interest that it receives from its investments.
In the half year result its dividend payment only accounted for 62.5% of the regular operating cash flows.
Would Warren Buffett Be Interested?
WHSP is sometimes referred to as the Australian version of Berkshire Hathaway due to its conglomerate, diversified and long term focused nature.
But I do think Mr Buffett would be interested. He wouldn’t want to pay a management fee (calculated as a percentage of assets) – WHSP doesn’t charge a fee.
Warren Buffett prefers to own businesses forever if he can. WHSP is already a century old and it’s very likely to be going in a few decades from now.
Warren Buffett wants to own businesses that can increase their earning power over the long term. WHSP has definitely been doing that for a long time and continues to do so.
The WHSP share price has risen 8% over the past week, so it’s not as cheap as it was. But management bought shares at $25 this year, so I think it still looks pretty good value over 10% below this.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: Jaz owns shares of Washington H. Soul Pattinson at the time of writing, but this could change at any time.