Yes, Brickworks is indeed in the business of manufacturing bricks and other construction materials. It has been doing so since 1934.
But most Aussies wouldn’t be familiar with the fact that this company is doing more than just making bricks. Brickworks also has a formidable investment portfolio. This has come in handy for the company before, enabling Brickworks to smooth out the volatility and seasonality of the construction industry.
So, if you’re a Brickworks shareholder, what kind of investments do you actually own by extension?
Well, Brickworks’ main breadwinner is still its twin construction businesses in Australia and the United States. However, the company has two other pillars that it uses to supplement these primary businesses.
Brickworks shares: fingers in many pies
The first is a property business. Brickworks has made a habit of developing old property sites that it has used in the past for making bricks and other construction materials. It works in conjunction with other companies, such as Goodman Group (ASX: GMG) to monetise these assets. Its primary property interest is the Joint Venture Industrial Property Trust that it operates with Goodman, which is now worth about $633 million for Brickworks.
That brings us to Brickworks’ other ‘pillar’. That would be its ownership of ASX shares. Yes, Brickworks is an investor on the share market just as you or I may be. So, what shares does Brickworks own?
Well, its primary investment is a 39.4% stake in Washington H. Soul Pattinson and Co Ltd (ASX: SOL). Soul Patts, as it’s also known, also has a stake in Brickworks shares itself, as well as a large portfolio of other shares.
Through Soul Patts, Brickworks in turn can claim indirect ownership of those same shares, which include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC) and BKI Investment Co Ltd (ASX: BKI). The latter is itself an old spin-off of Brickworks.
How important is this 39.4% stake in Soul Patts? Well, in its 2021 annual report, Brickworks called this investment a “core asset of Brickworks that has brought diversity and reliable earnings to the Company for more than 50 years”.
It went on to say that “our investment in WHSP provides a cash flow stream via dividends that allows long term strategic decision making by sheltering the business during cyclical downturns”.
So, there you go. It turns out that if you own Brickworks shares, you don’t just have ownership of any old brick factory.