Why has the Brickworks (ASX:BKW) share price slumped 5% in 9 days?

What’s up with Brickworks shares going down?

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The S&P/ASX 200 Index (ASX: XJO) seems to be having yet another day in the red on the markets so far today. At the time of writing, the ASX 200 is down a disappointing 0.19% to 7,234 points. The Brickworks Limited (ASX: BKW) share price is doing a lot better though. Brickworks shares are presently up a very healthy 1% to $24.50 a share.

However, Brickworks performance over the past week or two hasn’t been so rosy. Even after today’s initial rise, the Brickworks share price is still down by 5.44% over the past 9 days. Over the same period, the ASX 200 has lost a far tamer 2%. So what’s going on here for Brickworks?

Brickworks share price slumps, could Soul Patts be the problem?

Well, it’s not immediately clear. Brickworks has made no major announcements in the past few weeks, and we haven’t gotten any other business updates or the like.

However, there may be another possible explanation to consider here. Brickworks is a major shareholder of Soul Patts, or Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), holding around 39.4% of the company’s shares. In turn, Soul Patts also owns a large chunk of Brickworks shares, representing roughly 43.9% of the total company.

This exposure to Soul Patts means the Brickworks share price can be influenced by this company’s performance. And Soul Patts has also had a rough couple of weeks. That’s despite what was initially a well-received earnings report that was delivered late last month. Soul Patts has also recently wound up the acquisition of the Listed Investment Company (LIC) Milton Corporation Ltd (ASX: MLT). This saw Soul Patts acquire Milton’s sizeable portfolio of ASX shares.

Over the past 9 days, this company is also down by a little more than 8%.

Since this means that Brickworks’ large stake in Soul Patts would also be down by 8% or so, perhaps investors are punishing Brickworks shares for this fall in value.

At the current Brickworks share price, the company has a market capitalisation of $3.72 billion. It also has a price-to-earnings (P/E) ratio of 15.47 and a dividend yield of 2.49%.


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Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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