The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), or WHSP, share price is in focus after holding its AGM and giving a Q1 update.
WHSP is an investment business that has operated for over a century. It’s invested in numerous assets, including the ASX shares New Hope Corporation Limited (ASX: NHC), TPG Telecom Ltd (ASX: TPG) and Brickworks Limited (ASX: BKW).
AGM update
Surprisingly, it was announced that Thomas Millner was retiring from the board. During 2023, the board implemented an annual policy for reviewing director independence exceeding a tenure of more than 10 years. He will leave the board in December 2023.
Tom Millner will “remain a significant shareholder and supporter” of the company. After his retirement, the board will comprise of five independent directors, the managing director (Todd Barlow) and the chair Robert Millner.
The company reminded investors how it had performed during FY23 (and you can read our coverage of the result here), which included the portfolio growing by $900 million to $10.8 billion, and actively rebalanced the portfolio towards “more defensive asset classes” and increase the cash available for new investments which it thinks is a “prudent decision”.
During FY23, it invested $900 million into private equity and private credit, involving seven new bolt-on acquisitions across its top four private equity investments and 23 new investments in the private credit portfolio.
The annual ordinary dividend per share increased by 20.8% to $0.87 per share, adding to its growth record which goes back to 2000. In FY23, it paid out 75% of the net cash it received from the portfolio back to shareholders in the form of fully franked dividends. Owning WHSP shares have been rewarding in the long-term.
WHSP also said it added 23 new staff members during FY23, including the appointment of Jaki Virtue as chief operating officer.
Q1 update
In the first three months of its financial year, the All Ordinaries Accumulation Index fell by 7.3%, while the WHSP portfolio only reduced by 0.4% in that period and showed “its ability to protect capital and perform better in difficult periods.”
Its cash balance reduced from $900 million at the end of FY23, to $694 million at 31 October 2023 – WHSP has deployed cash into private investments.
It also added one of the most advanced fruit packing and processing plants globally into its private equity agriculture portfolio.
It also made a “significant investment” in the emerging companies portfolio with Nexgen Energy (Canada) Ltd (ASX: NXG).
Final thoughts on WHSP shares
WHSP is one of the best businesses on the ASX in my view because of its diversified portfolio, the ability to outperform over the long-term and a growing dividend.
It may not be as cheap as it was last year, but I think it could be a solid investment for a very long time.
