Washington H Soul Patts (SOL)
Is it too late to get into SOL or have I missed the boat completely. I think passive funds may feed into it and become another WES?
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Answer
Hi Colin,
There is definitely some similarities between the two:
Wesfarmers has a broad portfolio of investments including Bunnings, Kmart, Wesfarmers Health & Officeworks – the first two make up almost 70% of the group’s revenue.
Washington H Soul Patts (SOL) most significant long-term investments include:
- SOL holds a 39.9% stake in coal mining company New Hope (NHC), which constitutes approximately 13% of its total investment portfolio.
- SOL holds a 12.6% share in telecommunications provider TPG Telecom (TPG)
- Prior to the recent merger, SOL owned 43% of building products and property development company Brickworks (BKW).
Both stocks already trade on similar valuations: WES 36x and SOL 33.2x hence in our opinion it’s more a case of whose portfolio of assets you prefer. Year-to-date SOL +25.1% has outperformed WES +18% but it’s a close thing for these two quality operators, neither of whom are “cheap” at current levels, especially WES who’s likely to suffer if/when we see some reversion away from the “Certainty Trade”.
