The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is down more than 1% amid the company's latest update, which shows interesting investments and appealing outperformance.
The investment house is holding a shareholder briefing presentation today in Brisbane. As well as providing an overview of the business, it is also giving some details about the company's performance to 30 April 2023.
As many readers may know, the investment company has been listed for more than 100 years. It has shareholdings across a number of different sectors in both listed and private businesses.
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Portfolio update
At 30 April 2023, the business had a net asset value (NAV) of $10.6 billion. It reported net asset outperformance of 1.4% for the nine-month period to 30 April 2023 compared to the All Ordinaries Accumulation Index (ASX: XAOA).
Soul Pattinson said it has increased its net cash position by $254 million and continued to invest in 'alternative assets'. These include investing $469 million in structured (debt) yield and $190 million in private equity, which could influence Soul Pattinson shares in the future.
In the private equity portfolio, it has "continued to add scale to wholly owned subsidiaries". Aquatic Achievers recently acquired another swimming school business Kirby Swim, a Western Australian-based swimming school operator with five sites.
Electrical parts business Ampcontrol has recently acquired Androck Engineering, a "machining and manufacturing" operation based in New South Wales.
Soul Pattinson said it is "continuing to assess new acquisition opportunities for new and existing investments".
With the structured yield portfolio, it has a weighted average cash yield of 12.1% per annum. The company said it had "diversification in terms of sector and credit profile" and international exposure within the portfolio. Soul Pattinson is expecting to continue to grow this portfolio.
Within its emerging (smaller) company portfolio, it said the return for the financial year to date to April 2023 was 8.5%. Soul Pattinson said it's taking a proactive management style but defensive posture with the portfolio. It is tilted toward materials and industrials, but underweight to technology.
Could the outlook affect the Soul Pattinson share price?
Soul Pattinson believes there are opportunities for value investors to take advantage of an increasing price for risk in the current market.
Management has "confidence" in its defensive portfolio settings, which are "continuing to gain traction in the current market", it said.
The company also has an active pipeline of investments under consideration.
If the portfolio keeps outperforming, this could be beneficial for the Soul Pattinson share price going forward.
