Why Soul Patts (ASX:SOL) is up 90% this year and could go higher

Soul's portfolio of businesses have been performing very well recently and the company continues to compound shareholders money at an impressive rate decade after decade.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

We usually expect big movements in share price for smaller, more speculative companies. But not for a boring old investment conglomerate like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Shares of Soul Patts have been flying. In the last 12 months, shareholders have earned a return of 88% including dividends, closer to 90% including franking credits. So what's going on?

History

For a long time, Souls has traded at a discount to its NTA. This occurs for various reasons, but the point is, it was persistently discounted by the market. Most likely due to its cross-ownership structure with Brickworks Limited (ASX: BKW), where each company owned a bit over 40% of the other. My understanding is this goes back decades and was done to prevent attempted takeovers.

Performance

Over the last 12 months, the businesses in Souls portfolio have shot up in value. Brickworks is up 26%. New Hope Corporation Limited (ASX: NHC) is up 90%. And TPG Telecom Ltd (ASX: TPM) is up 42%. Soul Patts also has a growing portfolio of financial services companies and numerous other business units that have been doing well.

To give some context to how great a company this has been, over the last 40 years, Souls has returned 16.7% per annum to shareholders. That's huge compound growth in anybody's language.

Today

The discount to NTA has now closed and shares are likely trading at a small premium. In the recent presentation, Souls noted NTA per share was over $27 at the end of August. With the share price now pushing over $30, it seems likely that shares are now trading at a premium.

A few people have already suggested selling based on this factor alone. I don't buy it, and here's why…

It could be argued that Souls deserves to trade at a premium because of the long-term wealth creation by the company. Management has real skin in the game and is careful with shareholders capital.

Besides, if you've doubled your money with Soul Patts over the last year or so, you'll likely be paying around 20% capital gains tax to sell up and invest elsewhere. I'm fortunate enough to be in this position, and I'm not selling a single share.

Personally, I don't think it's smart to pay 20% tax, just because a company may be 10% overvalued. That's especially true when you consider the company could simply keep performing well and deliver market-beating returns as it has decade after decade.

Foolish takeaway

This is a high quality diversified business with a great history, which spits out increasing dividends year after year. In my view, a great example of a true bottom drawer stock.

Should you invest $1,000 in CSL right now?

Before you buy CSL shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and CSL wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Dave Gow owns shares of Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks and TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

Smiling couple looking at a phone at a bargain opportunity.
Growth Shares

Looking for ASX growth shares? I rate these 2 as buys in May

These ASX investments have an exciting future. Here’s why.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Growth Shares

The best ASX growth stocks for smart investors to buy with $5,000

Analysts are bullish on these shares. Let's find out why.

Read more »

Happy young couple saving money in piggy bank.
Growth Shares

Where to invest $2,500 into ASX 200 shares today

Analysts think these shares could be top buys for investors with money to invest.

Read more »

Two people having a meeting using a laptop and tablet to discuss Seven West Media's balance sheet
Growth Shares

3 excellent ASX shares to buy for your SMSF

Analysts think these shares could be top picks for SMSF investors. Let's find out why.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Growth Shares

2 ASX growth shares to supercharge your portfolio

Analysts think these shares could be in the buy zone for growth investors right now.

Read more »

A group of people gathered around a laptop computer with various expressions of interest, concern and surprise on their faces. All are wearing glasses.
Growth Shares

Turn $300 into significant wealth: 3 explosive ASX opportunities for Aussie investors

Analysts think these shares could be great picks for growth focused investors.

Read more »

A man looking at his laptop and thinking.
Growth Shares

What I'd buy with $2,000 on the ASX right now

Here are three options for investors to look at this month.

Read more »

Silhouette of CEO standing in conference room looking out at cityscape.
Growth Shares

3 founder-led ASX 200 shares with serious long-term upside

Let's see what makes these shares top picks according to analysts.

Read more »