Washington H. Soul Pattinson (ASX: SOL)
has started investing in a new sector and it has made me even more comfortable about buying shares.
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 such as construction, resources and telecommunications.
WHSP Invests In Aged Living
WHSP is going to start investing into the aged living / aged care sector according to reporting by the Australian Financial Review.
Before you start worrying WHSP is entering a dangerous area, the sector it’s investing in is (luxury) retirement living facilities/villages.
That’s why WHSP CEO Todd Barlow said he isn’t worried about any fallout from the aged care Royal Commission because it’s a separate asset class:
“We are not going to compete with the highly regulated, high touch care operators.”
So What Is WHSP Doing?
The investment house is going to work with high-end aged care operator Shane Moran with its “first” foray into the aged care sector.
This new venture will be called “by Moran”. The first property will be in Cronulla, it’s a $40 million beachfront site which will the pair will then spend another $36 million on to have one, two and three bedroom apartments. But the partners want to build a number of these facilities over time.
According to the AFR, the site will have a concierge, club room and bar, dining facilities, business amenities, infra-red sauna, gym, pool, cellar, a cinema and 24 hour emergency assistance. Everything you could want.
Mr Moran said to the AFR: “Soul Patts has great expertise in funds management and property, which is a benefit to us.
“Aged care has tended to be shorter and later in life, with more people staying in their homes a lot longer. But this is an opportunity for those people to retire but be with friends and like minded people, but they do not require that high level of care.
“There is an enormous growth in active, older downsizers wanting not just a more convenient and worry-free lifestyle, but also a more connected one.”
Why I Want To Buy WHSP Shares
WHSP could be one of the best shares on the ASX because of many attributes. It’s a long term investor, that invests in uncorrelated assets, it has outperformed the ASX share market over the multi-year time periods and its portfolio is diverse.
Some investors may feel that WHSP isn’t diverse compared to the ASX 200 (ASX: XJO), but it’s only because of how well its investments have done that its holdings of TPG Telecom (ASX: TPM), New Hope (ASX: NHC) and Brickworks (ASX: BKW) are so large.
Every year WHSP invests in new things like this aged living which diversifies it further, at a presumably good price, with attractive long term tailwinds and makes WHSP a bit safer in terms of individual sector risks.
WHSP is currently valued at around the price of its underlying assets and it has a fully franked dividend yield of 3.7%. In my opinion it’s a fair price for a great company, although it would be nice to buy it at an even cheaper price.
It could be a good strategy to buy WHSP shares mixed with good growth shares, like the ones in the free report below.
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Disclosure: Jaz owns shares of Washington H. Soul Pattinson at the time of writing, but this could change at any time.
