As Warren Buffett's saying goes, time is the friend of wonderful businesses, such as Washington H. Soul Pattinson & Co. Ltd (ASX: SOL).
You and I both know that history doesn't repeat itself – but it does rhyme.
Meaning, sometimes, a good thing will keep on being a good thing.
Similar to the old gardening analogy: water your flowers, not your weeds.
If the Australian share market, or ASX, is a garden then Washington H. Soul Pattinson, or "Soul Patts", has to be your prized and most beautiful flower.
Value
Unfortunately, the hard thing about good things is that they are rarely easy – nor cheap.
Soul Patts shares trade at a premium valuation, which normally puts me off.
Fortunately, its premium is for good reason and I see no reason for that to change.
Of course, you're thinking: Mr Market can be a funny bugger.
Indeed, sometimes he can throw babies out with the bathwater. But waiting around for the market to crash and companies like Soul Patts to fall in price is often unrewarding.
With a wonderful business, I think it's better to start a small position in the present than throwing an anchor out at a price that might never come sometime in the future.
And if Soul Patts' valuation improves, it'll be time to buy more.
Wait, wait, wait: who is Soul Patts?
Let's back it up so we're on the same page.
Washington H. Soul Pattinson is an old-school, 100-year-old, conglomerate-style business that invests large amounts of money in other public and private businesses. For example, it owns 25% of TPG Telecom Ltd (ASX: TPM), Australia's now third-largest telco; Brickworks Limited (ASX: BKW), which does — you guessed it — bricks; and Australian Pharmaceutical Industries Ltd (ASX: API), the name behind Priceline and Soul Pattinson chemists.
For the record, I don't like its exposure to coal on a philosophical level, either, so please don't spam my inbox.
Now, it's all well and good to own multiple businesses. But how successful has Soul Patts been?
About this good:
The numbers speak for themselves (and they're even better over a longer period!).
Investing has two key elements: strategy and execution. They are two different things.
Fortunately, Soul Patts' team is good at both.
It is led by the long-serving Robert Millner as Chair, with Todd Barlow as Managing Director. Barlow, who took the reigns in 2015, follows an MD that held the role for three decades. He comes well-equipped to the top job, having achieved 11 years with Soul Patts and holding down an enviable position in the group's investment banking division.
Millner's son also serves on the board and is a portfolio manager for one of Soul Patts' shareholdings, BKI Investment Company Limited (ASX: BKI).
Foolish Takeaway
Seth Klarman, a US investor whose Margin of Safety investing book sells for $2,000 a pop ($800 second-hand), famously said that value investing is the marriage of contrarian thought and a calculator.
If we can allow ourselves to assume that our calculator is a low on batteries, Soul Patts shares are a buy today.
Because although some critics say the 'conglomerate is dead', over the long-term (five years plus), Soul Patts has proven the haters wrong time and again.
And I see no reason for that to change.
