Washington H. Soul Pattinson has paid a dividend every year since 1903 and raised it every year for the last 27, and it is now sitting on close to $3 billion of cash — roughly a fifth of the portfolio.
A fund manager with that much cash would be answering to investors who can pull their money out. Soul Patts has no outside investors at all: it invests its own balance sheet, so its shareholders can sell the shares but cannot take the capital back.
"Our shareholders can change their mind and can trade daily but the balance sheet doesn't change."
Todd Barlow has run the company since 2014. It is the second oldest listed company on the Australian exchange, carries a market capitalization of about $16 billion, and has beaten the market by roughly 5.4% a year over the past 20 years.
The full interview is covered here so you can skip it. 35 minutes of audio, 20 minutes of reading.
Here are the 13 principles that matter.
👤 Guest: Todd Barlow, Managing Director and CEO of Washington H. Soul Pattinson (ASX: SOL), the listed investment house he has run since 2014
🎙️ Hosts: Bryce Leske and Alec Renehan, co-founders of Equity Mates Media
📰 Published: 14 September 2026 on YouTube (Equity Mates)
🔴 YouTube | 🟣 Apple Podcasts | ⏱️ 35 min | ✅ Time saved: 15 min
Key Takeaways
Permanent capital's real advantage is that it removes the incentive to hug the index
A manager who can face redemptions will drift toward the benchmark whether or not they mean to, in Barlow's account
The company has raised its dividend every year for 27 years, at a compound rate above 10%, and pays out about 75% of the cash it generates
Barlow thinks specialization makes investors worse, not sharper
A team that only covers Australian banks can only ever pick the best Australian bank
The risk in US private credit sits in loans to private equity, and the collateral behind a lot of it is software
His own book lends where the equity underneath is worth something, and has returned 13 to 14% for four or five years
Cash is just shy of $3 billion, about 20% of the portfolio, and fixed income is worth owning again for the first time in years
Large caps are well priced and smaller companies outside the indices are being taken over by private equity
They bought a coal mine from sellers under environmental pressure and it became, in his words, a company maker
Coal went from about $50 a ton to about $400 a ton
The AI parallel he uses is telecoms in 1996: the right forecast would still have led you to Nokia and BlackBerry
So he buys what benefits from AI but does not depend on it — energy, and cloud data centers with a property backstop
Four of the seven most senior people have been there over 20 years, and the chairman has been there 40
About a quarter of the portfolio could be offshore within two or three years, mostly the US
1. What Soul Patts Actually Is
Bryce Leske and Alec Renehan opened by explaining that the guest's company is 123 years old even if he is not, and Barlow picked up the history from there.
It began roughly 140 years ago as a chain of pharmacies and listed in 1903, which makes it the second oldest listed company on the Australian exchange
About seventy years ago it started diversifying, and Barlow said the other investments became much bigger and more successful than the pharmacy business. The pharmacy operations were exited entirely in the last few years, leaving a pure investment vehicle
The company today has about 85,000 shareholders and a market capitalization of about $16 billion, which puts it inside the top 50 companies on the exchange
On the record: he said the company has done about 5.4% better than the market over the last 20 years. On his figures, $10,000 invested twenty years ago would be worth about $110,000 today, which he said is 2.7 times an equivalent investment in the index
"So, it's uh lots of happy shareholders, uh diverse portfolio, uh it's one of those things that you can set and forget"
The hosts framed the appeal as an endowment or family office style of investing — no unit holders expecting their money back on a schedule, just a balance sheet being invested for the long term
2. No Buckets, No Mandate
Asked for the investment philosophy, Barlow described it mostly as an absence of the constraints other managers work under.
"I guess what we're known for is that we are patient long-term disciplined investors."
The clearest statement of method is negative. "What that means is that we are not trying to fill buckets"
There is no predetermined allocation per asset class. What results, he said, is a portfolio diverse across asset classes and industries because of where the opportunities were, not because a target said so
The bias in what they buy is defensive. They want a portfolio that protects capital in downturns, and they lean toward businesses that are proven cash generative, low cost and resilient
3. 27 Years of Dividend Rises
The hosts noted that Soul Patts is the first Australian company to reach the 25-consecutive-years-of-dividend-increases mark that defines a dividend aristocrat on the S&P 500, and asked how that shapes the investing.
"Since 1903, we've never missed a dividend." He listed two world wars, the Great Depression and the global financial crisis among what the streak has survived
The increases are not token. "I mean, in the last 27 years, the compound annual growth rate's been over 10%"
The dividend is a diagnostic as much as a payment. "It's important to us because we think the sign of a healthy portfolio is one that's generating more cash" — if the investments are throwing off more cash, he said, it is hard to believe the portfolio is going backwards
He was explicit that income is not the whole objective. Soul Patts is a total return investor looking for capital growth as well as dividends, and wants to provide the mix
Asked whether the pressure grows as the streak lengthens, his answer was one line. "I don't want that to happen on my watch"
The next milestone is a long way off. The hosts raised the dividend king category, fifty years or more of increases, which Australia has never produced; Barlow pointed out it is 22 years away and said he would probably be retired by then
The coverage gives him room. The dividend is paid out of cash generated by the portfolio, and the payout ratio is currently about 75%, which he said leaves headroom to meet the dividend even through a hiccup in cash generation
He said the cash coming in recently has been higher than historically, because of how the portfolio has been reshaped. Ten years ago three or four stocks made up three-quarters of it, so a problem at one was a problem for the whole portfolio
4. What Permanent Capital Buys
Asked to define permanent capital, Barlow named it as one of two competitive advantages, the other being flexibility.
The definition is about whose money it is. Soul Patts invests its own balance sheet and has never raised a fund from third-party investors; the shareholders own the balance sheet and can trade the shares daily, but the balance sheet itself does not move
"Our shareholders can change their mind and can trade daily but the balance sheet doesn't change"
That removes redemption risk and liquidity needs, which he said is what lets them act when others cannot
His account of what redemption risk does to other managers is the sharpest part of the section. "For that reason, whether it's conscious or subconsciously, they will sort of tend to hug the index because if you make big departures from the index and you're wrong, even if it's just wrong in the short term, you risk people pulling money out and that's fundamental to their business"
Not having that constraint lets them take long-term views and collect the premium for accepting illiquidity. He said they are not guessing whether something rises or falls over weeks or months, and called judging the fundamentals over time a healthier way to invest than keeping up with a benchmark
The hosts illustrated the contrast with fund life. A private equity or venture fund raised with a seven- or ten-year life eventually has to return capital — they pointed to venture funds that backed Canva having to extend fund lives because there has been no listing or sale
Flexibility is the second advantage, and it comes from having no mandate. "We raised it in 1903" — there is nothing telling them what they can invest in
"If you've been given money to invest in VC, you've got to deploy it into VC. Whereas for us, we go where the opportunities are and that evolves over time"
5. Why They Stay Generalists
Asked how much sits in private and illiquid assets, Barlow gave a number and then explained why he refuses to treat it as a target.
About a third of the portfolio is currently in private equity, private capital and real assets — the things that are neither listed equities nor fixed income
Six months ago it was half. The difference is a $1.9 billion industrial property portfolio sold a couple of months before the interview. Asked whether Soul Patts might head toward the roughly three-quarters private allocation of a large endowment such as Yale's, he said the allocation is entirely opportunity driven
He said they do not respond to a sale by deciding they now need more real assets: "that was the right trade for us at the time and we'll just look for whatever comes our way"
What replaces a target is internal competition. "So, there's a real discipline around competition for ideas in our portfolio" — a new idea competes both with what is already held and with everything else the capital could do
Individuals on the team may have specialties, but none of them has a pot of capital they must deploy. They have to find opportunities that beat whatever else the firm is looking at on a risk-adjusted basis
His argument against specialization is the strongest opinion in the first half of the interview. "So I think it's actually healthy for our team to be generalists"
A team focused exclusively on one asset class, or one industry, loses the ability to step back — if all you do is invest in Australian banks, all you can do is choose the best Australian bank
"And I think that makes you a poorer investor, not a better investor"
"I mean, people think that specialization actually makes you sharper. But I think that being a generalist has real appeal"
6. Where Private Credit Breaks
The hosts raised private credit directly: the inflows, the shaky year for US private credit, and the Bathla collapse in Australia and how much private credit had been lent to it.
His starting position is that nothing systemic has broken. He said there do not seem to be systemic issues and that neither Australia nor the US has produced many major problems so far
The concern is a consequence of the inflows themselves. Money raised has to be put to work, and "In putting it to work, they've sharpened the prices and loosened the terms because they want to get money out the door and it's competitive"
He named where that money went. "And the biggest opportunity in the US is sponsor leverage finance. So loans to private equity" — typically highly leveraged loans, arranged by borrowers he described as very sophisticated at engineering maximum leverage and getting pricing and terms in their own favor
The collateral behind a lot of it is software. A great deal of private equity capital over the last two or three years went into software-as-a-service businesses, which are now the companies people worry AI will disrupt
He made a point about the equity underneath that he said is under-discussed. Once losses reach the credit, the equity below it has already been wiped out — and in his view not enough people are talking about the scale of equity losses implied by any serious private credit losses
The Australian equivalent exposure is real estate, which he said Soul Patts does very little of
On both, the reason for staying out was capability, not forecast. They looked at real estate and sponsor leveraged finance and concluded they had no edge there, that the Australian market was already served, and that they did not especially like the underlying product
"So, we've gone in our own direction"
7. Lending Behind the Equity
Asked where he does like private credit, Barlow described a book underwritten the way an equity investor would underwrite it.
The test is whether they would want to own the business. They ask whether they like it as an equity investment, then treat the equity as the buffer sitting below their loan
"So if we look at it and say there's genuine value in the equity here there's genuine value in the assets then that's something that we're happy to invest in"
They compete on structure rather than price. They deliberately do not look where everyone else is looking, and instead provide bespoke solutions to specific problems
His worked example is a company whose shares are cheaper than management thinks they should be. Rather than raise dilutive equity at that price, the company borrows to bridge itself to a higher share price
The returns, and the trade-off behind them, are explicit. "Our portfolio has been doing 13 to 14% returns for the last four or five years which when you think about the fact that we are protecting our downside and stepping in front of equities is really great risk-adjusted returns"
He said they give up some or all of the equity upside in exchange for the downside protection, and are happy with that trade
8. Cash Is Now 20%
Asked where he is spending his time in public markets, Barlow gave the most defensive answer in the interview.
"Public markets are really tricky at the moment."
The market structure he described is a flight of capital into large companies. Large-cap stocks are, in his words, quite well priced, and that has left behind smaller and mid-sized companies outside the indices
The consequence has been a wave of private equity approaches to those smaller companies, including several holdings in Soul Patts' own portfolio that are subject to takeover. He read it as a natural progression, and said there is good value at that smaller end
Everywhere else he is cautious. The listed portfolio is more liquid and more defensive than usual — infrastructure, energy, insurance and high-quality defensive stocks — and the size of the public equities allocation has been reduced
Cash is just shy of $3 billion, which he put at about 20% of the total portfolio. He was clear it is not a passive holding: it is opportunity cash to deploy into whatever comes up
He acknowledged the cost of holding it has historically been high. "Yeah, obviously the last decade or so it hasn't really paid to be in cash"
"But we're getting paid to wait" — and he said fixed income is a good place to deploy for the first time in a long while
The hosts noted that the 40% fixed income leg of a 60/40 portfolio has been cut to zero by many investors, and observed that the asset class draws unusually divergent opinions on the show. Barlow's view is that it is coming back
His reasoning is about optionality rather than yield. He does not think he misses many equity market returns by sitting in cash products at today's prices, and it is the liquidity that lets them buy when things are sold off and become really cheap
9. Coal and the Energy Trade
Asked about New Hope, a long-held coal position, Barlow put it inside a broader energy thesis.
The thesis is demand growth, and it predates AI. As people get wealthier, urbanize and electrify, energy demand grows — a trend he said has been accentuated by AI and data centers
"So we think that energy is a really strong thematic"
The expression differs by geography. In the US he expects nuclear, and Soul Patts holds a large investment in a uranium producer in Canada. In Australia he expects renewables, and holds investments positioned for the changing grid and energy mix
In Asia it is still coal, and he said demand there is not merely holding but growing, with new coal-fired thermal power stations being built
He argued the position does not require a long-term call. New Hope's permits do not run past about twenty years, and he said coal will be very safe over that horizon and demanded by Australia's Asian neighbors
On the ESG pressure to sell, his answer was that the long-standing philosophy is what let them refuse. He said having preached a long-term, disciplined approach for so long meant they could tell shareholders who wanted them out of coal on environmental, social and governance grounds that this was a short-term view
"I mean I think coal got down to $50 a ton and then rocketed up to $400 a ton"
They were buyers from the sellers under that pressure. "I mean, we bought a coal mine from large investors who had pressures from an ESG perspective"
He said it took about three years to get paid back, then "Then it paid us back in 18 months and then paid us back at 12 months"
The sellers, he said, kept their own shareholders happy and it was a small part of their portfolios — but for Soul Patts "it was a company maker for us"
10. Selling the Property Book
Asked what else a shareholder would be exposed to, Barlow ran through the portfolio and then explained the sale of the industrial property assets to Goodman Group.
The portfolio is far more diverse than it was. Ten years ago it was the business that was folded into what is now TPG, plus New Hope and Brickworks
Soul Patts still holds TPG, having sold some of it down, and bought Brickworks outright last year, which he called the largest private equity investment
The other private equity holding is in electrical contracting, positioned for renewables and remote power
Health stocks have come and gone, and he said they are probably a bit underexposed there at the moment
The property sale was partly forced and partly welcome. Buying Brickworks was a change of control, which triggered pre-emptive rights for Goodman, and Goodman chose to buy out the portfolio
It suited him because the asset had stopped doing what he buys real assets to do. The approach is to buy things with a development uplift or that can be repositioned into something infrastructure-like over time
The land started as surplus land and clay pits inside Brickworks, was put into a joint venture with Goodman, and Goodman developed the sheds. He described it as roughly a 20% internal rate of return asset class for 15 to 20 years
Once it was mostly built out, the remaining buyers were investors who want a bond-like asset, have a lower cost of capital, and will pay high prices for it
The proceeds mostly went to cash, with some into private credit and some into fixed income. His summary of the trade is that riskless bonds now pay almost as much as fully developed industrial property, with liquidity on top
About $1.3 billion of real assets remain, including agricultural property, retirement villages they develop, and some data centers
11. The No Regret AI Trade
Asked what advice he has for investors riding the data center wave, Barlow gave the interview's central analogy.
He called it incredibly tricky and very uncertain, and said picking winners during technological change is genuinely hard
The parallel is telecoms in 1996. He described reading a piece arguing that a perfect forecast of today's dependence on mobile phones, data and the internet would have sent an investor in 1996 to buy telecoms businesses — and probably Nokia and BlackBerry
"But even telco investments have been capital intensive competitive not fantastic investments"
The companies that ultimately won from the internet and the growth in data use were developed much later
"I mean AI will come and it will be amazing and it's just really hard to determine now who the ultimate winners will be"
His answer to that problem is a method rather than a prediction. "We try to invest in a no regret kind of way" — things likely to benefit from AI that cannot really lose if AI disappoints
Energy is the clearest case. Even if AI becomes far more energy efficient, he said, electrification of transport and everything else still requires a great deal more electricity
"So, we just think that energy is a low regret trade"
The data centers they own are cloud-based rather than AI-specific, which he said have more track record and clearer demand for data use, consumption and storage, and if they fail there is an industrial property backstop
"So we think that we don't have too many regrets in investing in data centers"
He drew the line explicitly: a specific AI data center or hyperscaler carries technology risk and use risk you would want to be compensated for
12. Culture Outlasts People
Asked how an enduring philosophy survives when the capital is permanent but the people are not, Barlow answered on tenure and culture.
Staff turnover is very low. "I mean people don't really leave our place. They stay a long time"
Four of the seven most senior people in the leadership team have been there more than 20 years, and he named Rob Millner as having been there 40
The team has been deepened deliberately. In the last five or six years it has gone from 25 people to 55, which he said brings more people through
What he thinks actually carries the philosophy forward is not the values statement but the adherence to it. "But I think fundamentally the thing that's most important is the culture and not just the cultural values but the adherence and the way that people embrace the culture"
"If they embrace what has made us successful and apply that into the future then the people may change but the culture will live on"
He argued the culture is easy to sustain because the mandate is enviable. Other asset managers, constrained by fund terms and without permanent capital or flexibility, wish for the same opportunity — so nobody at Soul Patts is being asked to accept a worse way of working
13. A Quarter of It Offshore
Asked what might define Soul Patts in future, Barlow named two shifts, and declined a third.
He started by saying the question is hard to answer honestly. Being opportunistic is one of the guiding principles, so what the portfolio looks like in future is not predictable — and he hopes it stays that way
He described the flexibility concretely: a $3 billion opportunity they really liked could be done, and if they decided private credit was a mess they could take it to zero
Fixed income is the first growing theme. He pointed to longer-term bond yields as an enduring feature of the portfolio for years to come, and said they will not be sacrificing returns to hold it
Geographic expansion is the second, and the larger one. Traditionally an Australian-only investor, the firm has spent the last couple of years building partnerships with managers offshore who think and act the way it does and have a strong track record
The reason is that the team, the networks and the deal flow are all in Australia, so partnering is how it reaches offshore opportunity without pretending otherwise
"I think in the next two or three years we could probably see about a quarter of our portfolio going offshore"
He said the private equity and private credit opportunity set offshore is a much deeper and more interesting pool
The geographic split leans American. "A lot of it is US-based, a little bit of Europe" — some of the credit funds are ones that benefit from distress, and he thinks Europe has a little more of that
On the US he reported the consensus of everyone who visits and comes back: the country is flying, optimistic and bullish, and it is somewhere he thinks they need to be
The complication is that the US index is mostly technology, and Soul Patts does not take risk on unproven business models — so the work is finding ways to invest there the way they invest at home, benefiting from economic and market growth
Asked whether there is room for Bitcoin, the answer was no. "I can't I can't see that happening" — "And first rule of investing is only investing what you understand"
Barlow's bottom line is that the advantage is structural rather than analytical: because nobody can withdraw the capital, Soul Patts can hold a fifth of the portfolio in cash, refuse an asset class it has no edge in, and buy what everyone else is being forced to sell.
Bonus Insights
The hosts opened by framing the episode as an attempt to convince one of them to give up Bitcoin for a no regret style of investing, which is the phrase the interview ended on
The pharmacy business that gave the company its name was exited entirely only in the last few years, roughly 140 years after it started and about seventy years after the diversification began
He would not name other managers, and the hosts said so before he had to. They supplied the private equity fund-life and Canva examples themselves, on the assumption he would not use specific names to make the point
The takeover wave in Australian small and mid caps is visible inside his own book — he said a few portfolio companies are currently subject to takeover approaches, which he attributes to the same large-cap crowding
Products, Companies & Tools Mentioned
Washington H. Soul Pattinson (The 123-year-old listed investment house Barlow runs: about $16 billion of market capitalization, roughly 85,000 shareholders, no external fund investors)
New Hope (The long-held coal position; permits running about twenty years, and Asian demand he says is still growing)
Brickworks (Bought outright last year and now the largest private equity holding; the change of control triggered Goodman's pre-emptive rights over the property joint venture)
Goodman Group (The joint venture partner that developed the sheds and then bought out the $1.9 billion industrial property portfolio)
TPG Telecom (Grew out of a business Soul Patts started; still held, though partly sold down)
Canva (The hosts' example of why fund life matters — venture funds that backed it have had to extend because there has been no listing or sale)
Nokia and BlackBerry (What a perfect 1996 forecast of the mobile internet would have led an investor to buy, and why Barlow will not try to pick AI winners)
Yale's endowment (Raised by the hosts as the roughly three-quarters private allocation Soul Patts is measured against; Barlow declined the comparison as target-driven)
Bitcoin (Ruled out, on the grounds that he does not understand it)
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