Soul Patts is axing equities for alternatives amid a worsening economic climate

Late last week, Washington H. Soul Pattinson (ASX: SOL) announced it had axed $1.4 billion in equities during the full year ending 31 July 2023, and warning the market of worsening economic conditions to come.

The conglomerate - which celebrated its 120th anniversary as a listed company this year - noted it had redistributed much of this capital towards alternatives such as private equity and "structured yield investments" like private credit - both of which, are typically uncorrelated to equity markets.

It comes as the Reserve Bank of Australia keeps interest rates on hold at 4.1% in October, while this week, the yield on 10 and 30-Year US Treasuries hit 16-year highs. The last time the yield on Australian 10-Year Government Bonds was this high was in 2011.

In this interview, Barlow talks dividend sustainability, the investment team's approach to private assets, as well as the risks Soul Patts foresees on the horizon.

Plus, he also shares why the team is "very bullish on uranium", as well as three future-facing themes Soul Patts has identified as areas of long-term opportunity.

Note: This interview was filmed on Tuesday 3 October 2023.

https://www.livewiremarkets.com/wires/soul-patts-axes-equities-for-alternatives-forewarns-of-worsening-economic-climate/edit

Timecodes:
0:00 - Intro
0:44 - Highlights from Soul Patts FY23 report
1:26 - The board is confident that cash generation and dividend increases can continue
2:05 - Where Soul Patts is seeing opportunity within listed investments
3:24 - How Soul Patts is allocating to small and large-cap equities
3:55 - A better understanding of Soul Patts' investment team
4:45 - A deep dive into private equity and structured yield investments
6:46 - For investment bankers: What it takes for a business to make the grade
8:25 - What it will take for Soul Patts to put its $911m war chest to work
9:20 - The risks Soul Patts sees on the horizon and the chance of a recession
11:04 - How Soul Patts performs during dislocations
12:03 - Three future-facing themes (and how Soul Patts is allocating to these)