Yesterday, leading investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) announced its FY19 result which included an 18% increase of its regular cashflow from operations.
Aside from outlining how its current investments went over the past 12 months, Soul Patts also gave some insight into areas where it's looking for value across asset classes.
Those five areas are:
- Private equity
- Private credit
- Retirement living
- Financial services
- Agriculture
Obviously it's quite difficult to find private equity on the ASX as well as private credit. Perhaps Soul Patts is thinking about stepping into the credit space where some banks aren't really willing to lend any more – there's still money to be made. Indeed, 360 Capital Total Return Fund (ASX: TOT) is doing a good job at that.
Retirement living is certainly an area that's been roughed up a bit after the aged care royal commission. Aveo Group (ASX: AOG) is being snapped up by a foreign buyer and some fund managers are starting to sniff around aged care operators like Japara Healthcare Ltd (ASX: JHC).
The royal commission into financial services has caused the big banks like Australia and New Zealand Banking Group (ASX: ANZ) to have another think about being in the financial advice space. However, as Soul Patts mentioned, there's still a large amount of cash flowing into superannuation each year – it's a growth area.
Agriculture is an area that Australia has a big advantage in, and it could grow substantially with changing consumption habits and a growing global population. Soul Patts added to its Duxton trusts investments, but in my opinion there's plenty of other good options at good value like Duxton Water Ltd (ASX: D2O), Rural Funds Group (ASX: RFF), Vitalharvest Freehold Trust (ASX: VTH) and Costa Group Holdings Ltd (ASX: CGC).
Foolish takeaway
Aside from agriculture, I don't really have exposure to the other areas in my portfolio. But I'm very happy to get exposure through my holding of Soul Patts shares and plan to increase my holding of it steadily over time.
