Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), or Soul Patts, shares have delivered solid long-term returns – it's up 110% in five years. Warren Buffett has delivered impressive investment returns through Berkshire Hathaway too, so it's interesting to consider whether the legendary American investor would be interested in the ASX company.
Washington H. Soul Pattinson is sometimes called the ASX version of Berkshire Hathaway because they are both investment conglomerates with private businesses and listed investments.
While I don't know Warren Buffett, nor do I know if Berkshire Hathaway is actually interested in Soul Patts shares, I think we can gain some insights into how interested he may be in the ASX investment company from what he has previously said about investing.
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Long-term success
Soul Patts has been delivering solid returns for a long time, decades. It has built a portfolio across a number of sectors including resources, telecommunications, agriculture, swimming schools, financial services and electrification.
The ASX investment company makes investments with the long-term in mind, it's not a short-term trader. As Warren Buffett once said:
Someone is sitting in the shade today because someone planted a tree a long time ago.
Soul Patts 'planted' a number of trees a long time ago, including Brickworks Ltd (ASX: BKW), New Hope Corporation Ltd (ASX: NHC) and TPG Telecom Ltd (ASX: TPG) (which then created the spin-off Tuas Ltd (ASX: TUA).
Buffett also said:
Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
Soul Patts shares represent the type of investment I'd be happy to own for 50 years if the market shut down. The fact that the ASX company operates in a similar way to Berkshire Hathaway may make it attractive and familiar to Warren Buffett.
Is this a good time to invest?
Everyone would like to buy assets for significantly less than they're worth.
But, businesses that have a long-term track record of doing well are less likely to trade cheaply compared to their underlying value, in my opinion.
These days, Soul Patts shares usually trade at a premium to its net asset value (NAV). That premium has increased since the announcement of the merger between Soul Patts and Brickworks.
But, as Warren Buffett has said:
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
I do believe Warren Buffett would be interested in Soul Patts shares, though I'd guess he would want a cheaper price if he were going to invest billions.
For me, I'd be very happy to buy some Soul Patts shares today with a long-term holding in mind.
