Recently, the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (Soul Patts) share price has beaten the market by an impressive amount. Since 19 February 2025, the company has risen by 3.1%. That compares to a 9.2% decline for the S&P/ASX 200 Index (ASX: XJO) and a fall of 13.6% for the Betashares Nasdaq 100 ETF (ASX: NDQ).
It's rare that an ASX share has registered an increase during that time. The ASX gold share sector is one area that has experienced a positive bump thanks to the rising gold price.
What's causing the Soul Patts share price to be resilient? It's ultimately down to the buyers and sellers of the shares each day. But, I think there are three reasons for its impressive performance.
Defensive investments
The investment house is invested in a number of sectors that are largely uncorrelated and can provide defensive cash flow, which can support the valuation.
Those sectors include telecommunications, resources, swimming schools, agriculture, credit, industrial property and so on.
A large majority of the assets are focused on Australian operations, which may be somewhat protected from the tariff war that's building between the US and China.
By generating defensive earnings and paying a steadily growing dividend, investors may be attracted to Soul Patts shares, while existing shareholders may not wish to sell.
Long-term track record
The company reported in its FY25 half-year result that its portfolio has delivered much better returns than the market when the market falls.
In the last 25 years, in months when the market fell, the average monthly return for the All Ordinaries Accumulation Index (ASX: XAOA) was negative 3.3% and for Soul Patts shares it was negative 0.9%.
The defensive nature of the business gives investors confidence, making it a self-fulfilling cycle that it doesn't fall as much because investors keep buying Soul Patts shares with a view it's more defensive than the market.
Growing portfolio
Soul Patts doesn't just have a static portfolio of stocks, it regularly adds to its overall investments by using the excess cash flow it has. Its portfolio of assets pays dividends to Soul Patts, then the ASX share pays a majority of that to shareholders. The retained amount is invested in further opportunities.
If the underlying portfolio is growing in value, it's natural for the Soul Patts share price to rise over time. Of course, it is impressive it has risen during this period of significant volatility.
I don't know if it will be able to continue rising in the next few weeks, but I think it has demonstrated its ability to be defensive and continue attracting investor attention.
