- Profit: Statutory profit has fluctuated significantly due to the timing of major acquisitions (like the Milton and Brickworks mergers). The statutory net profit after tax (NPAT) for the 1H 2026 reached $2.3B, driven largely by non-recurring accounting gains, while underlying profit experienced steady single-digit growth. [1, 2]
- 10-Year Median P/E: 21.85
- 10-Year Minimum P/E: 4.91
- 10-Year Maximum P/E: 50.09
| Fiscal Year | Approximate P/E Ratio | Key Drivers & Context |
|---|---|---|
| FY 2026 | ~6.9x – 7.2x | Driven down sharply by a massive $2B non-recurring gain from the Brickworks merger. |
| FY 2025 | 34.8x – 40.9x | Peaked higher as the stock price gained ground while regular statutory earnings normalised. |
| FY 2024 | 23.5x – 24.6x | Aligned closely with historical averages during steady portfolio performance. |
| FY 2023 | ~30.0x | Elevated valuation driven by defensive posturing post-COVID-19. |
| FY 2022 | -3.4x to 15.0x | Suffered major volatility and technical negatives due to localized accounting adjustments. |
| FY 2021 | ~12.6x | Hit a local multi-year operational low during the initial post-COVID-19 recovery cycle. |
| FY 2017 – 2020 | ~18.0x – 25.0x | Maintained steady trading bands reflecting its underlying holdings in TPG and New Hope Coal. |
| FY 2016 | ~20.0x | Long-term baseline before major portfolio restructuring phases. |
- The Conglomerate Distortion: Traditional statutory P/E ratios are highly unreliable for SOL. Because it accounts for major business actions (like the Brickworks merger) via statutory NPAT, the sudden drop in P/E makes the company look artificially "cheap". [1, 2, 3]
- Focus on Net Asset Value (NAV): Institutional investors assess SOL on its Pre-Tax Net Asset Value rather than its P/E ratio. Its portfolio outperformance and steady 28-year history of consecutive dividend increases are better performance indicators. [1]
- The Core Rule: A company creates economic value when its ROIC exceeds its WACC. [1]
- WACC Range: Estimates place SOL's historical and current WACC roughly between 5.8% and 8.5%, underpinned by a low beta profile (approx. 0.17 to 0.20) and a conservative, low-debt capital structure. [1, 2, 3]
- ROIC Volatility: Because SOL’s earnings reflect shifting asset valuations, dividends, and periodic large transactions (such as major strategic realignments or portfolio exits like TPG), standard trailing ROIC data points swing widely (e.g., dipping into negative single digits during down asset-valuation cycles while concurrently compounding long-term shareholder wealth at over 12%–13% annualized returns across 10-to-25 year horizons). [1, 2, 3, 4]
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Compare SOL with ARG
ARG vs SOL is a much more interesting “Buffett-style” comparison than ARG versus the dividend ETFs.
Both are long-established Australian investment companies, but they have evolved into quite different businesses. The biggest distinction is:
ARG is primarily a low-cost, diversified Australian equity income vehicle.
SOL is increasingly a diversified investment house designed to compound capital across multiple asset classes.
And the latest FY2026 numbers make SOL particularly interesting.
| ARG – Argo Investments | SOL – Soul Patts | |
|---|---|---|
| Founded | 1946 | 1903 |
| Structure | LIC | Investment company |
| Portfolio | ~80 ASX companies | Listed + private + credit + fixed income + real assets |
| Management style | Active/value | Active/value |
| Fee/MER | 0.14% | Not directly comparable |
| Debt | None | Strong liquidity / conservative balance sheet |
| FY26 dividend | 38.5¢ | $1.11 |
| Franking | 100% | 100% |
| Dividend growth | Long-term | 28 consecutive years |
| FY26 pre-tax NAV return | — | 10.4% |
| FY26 listed-equity portfolio return | — | 17.1% |
| FY26 investment cash flow | — | $571.5m |
| Current NTA/NAV discount | ~15% | Premium to NAV |
| Primary objective | Income + capital growth | Capital growth + growing income |
.................
ARG has approximately 80 ASX-listed holdings and describes its portfolio as focused on established companies with reliable cash flows and sustainable dividends.
SOL is much more diversified across asset classes following the 2025 Brickworks merger: at FY2026 it had approximately 30% listed companies, 20% fixed income, 17% private companies, 12% credit, 12% emerging companies and 10% real assets
........................
2. The Buffett question: "What is the economic engine?"
This is where I see the biggest difference.
ARG
ARG essentially owns a basket of high-quality Australian companies.
Its portfolio contains roughly 80 businesses spread across industries, with a preference for established companies with reliable cash flows and sustainable dividends.
The economic engine is therefore:
Australian corporate earnings → dividends → ARG → shareholders
It's relatively simple.
SOL
SOL is becoming more like a mini Berkshire Hathaway.
Its economic engine is:
Listed equities + private businesses + credit + fixed income + real assets + capital allocation
That gives management considerably more levers to deploy capital.
This is very important from a Buffett perspective.
Buffett's Berkshire isn't simply a portfolio of dividend-paying stocks. Its advantage comes from having permanent capital and the ability to move money between businesses and asset classes when opportunities arise.
SOL increasingly has that characteristic.
3. SOL's portfolio transformation is significant
The 2025 Brickworks merger changed SOL substantially.
At FY2026:
Listed companies
30%
Fixed income
20%
Private companies
17%
Credit
12%
Emerging companies
12%
Real assets
10%
That's a very different animal from ARG.
SOL also had $3.8 billion of liquidity at FY2026, including cash and facilities.
That means SOL can potentially act aggressively when markets become distressed.
That's a very Buffett-like characteristic.
4. But ARG has a huge advantage: simplicity and cost
This shouldn't be underestimated.
ARG's MER is:
0.14%
and it is internally managed. ARG says its internal structure means there are no external investment-management fees.
ARG also has no debt.
That's exceptionally attractive.
If you buy $500,000 of ARG, you're paying roughly:
$700/year
for the investment management structure.
That's remarkably cheap for an actively managed portfolio.
5. SOL's dividend record is extraordinary
This is one area where SOL has a particularly impressive record.
SOL has increased its ordinary dividend for:
28 consecutive years
The FY2026 dividend was:
$1.11 per share
up 7.8%.
The final dividend was 63¢ and fully franked.
SOL's five-year dividend CAGR is approximately 11.9%, according to its FY2026 material.
That's a very strong record.
ARG is also exceptional:
- dividends every year since 1946
- fully franked since 1995
- FY2026 dividend: 38.5¢
- moving to quarterly dividends from 2027
- intended FY2027 dividend: 40¢, fully franked.
So both have exceptional dividend cultures.
6. But I prefer the way SOL measures its dividend
There's an important Buffett-style distinction here.
SOL doesn't simply look at accounting profit.
It focuses heavily on:
Net Cash Flow From Investments (NCFI)
FY2026:
$571.5 million
up:
11.5%
SOL's dividends are explicitly considered against the cash flow generated by the investment portfolio. The FY2026 payout represented about 73% of NCFI.
That's an excellent metric to watch.
It asks:
"How much cash is the investment portfolio actually producing to support the dividend?"
rather than simply:
"What was accounting profit?"
That's very much the way I'd want to analyse an investment company.
7. Don't use P/E to value either company
This is particularly important with SOL.
A conventional P/E is almost meaningless for an investment company because unrealised gains, asset sales, associates and tax effects can dramatically distort accounting profit.
For example, SOL reported FY2026 statutory NPAT of:
$2.19 billion
up more than 500%.
But that number is misleading as a measure of recurring earnings because the Brickworks merger generated major non-recurring accounting gains. SOL itself says statutory profit isn't an appropriate measure of investment performance.
Instead, I'd look at:
- NAV growth
- NCFI/share
- dividend/share
- dividend growth
- shareholder total return
- discount/premium to NAV
- capital allocation
That's much closer to the way I'd analyse Berkshire.
8. Here's where the valuation gets REALLY interesting
ARG
Latest NTA:
$10.73/share
At 31 August it traded at approximately:
15% below NTA
So you're effectively buying:
$1.00 of assets for ~$0.85.
That's attractive from a value-investing perspective.
SOL
FY2026:
Pre-tax NAV/share: $36.09
Post-tax NAV/share: $38.17
SOL was trading around $46–48 in late September 2026.
So SOL is trading at roughly:
~27% above pre-tax NAV
and:
~22–27% above post-tax NAV, depending on the precise market price used.
That's the opposite of ARG.
9. This creates the central ARG vs SOL dilemma
You have:
ARG
Excellent business structure
- no debt
- 0.14% fee
- 100% franked dividend
- ~80 companies
+ 80-year history
- 15% discount to NTA
BUT:
less diversified investment opportunities
and historically less impressive capital compounding than SOL.
SOL
Exceptional history
+ 28 years of dividend increases
- strong capital allocation
- private businesses
- credit
- real assets
- fixed income
- enormous liquidity
- strong recent NAV growth
BUT:
You're paying a substantial premium to NAV.
That's the critical issue.
10. SOL's performance is impressive
The latest numbers are quite compelling.
For FY2026:
Pre-tax NAV
+10.4%
Listed-equity portfolio
+17.1%
versus ASX 200 total return of roughly 6% over the relevant period.
And in 1H FY2026:
SOL's portfolio generated:
9.7%
versus the ASX 200 total return of approximately:
3.1%
for the period.
Even more interestingly, SOL reported that since 2001 its total shareholder return has been 12.9% p.a., outperforming the ASX 200 Total Return Index by 4.6 percentage points.
That's a very long period.
11. This is the strongest Buffett-style argument for SOL
Buffett cares enormously about capital allocation.
And that's where SOL has something ARG doesn't have to the same extent.
SOL can decide:
"This listed company is expensive."
Sell it.
Then:
"This private company is cheap."
Buy it.
Then:
"Credit is attractive."
Deploy capital there.
Then:
"The market crashes."
Use accumulated liquidity to buy.
That flexibility is extremely valuable.
ARG is predominantly constrained to its Australian equity portfolio.
SOL's FY2026 portfolio turnover was $12.7 billion, demonstrating how actively it can recycle capital.
12. But paying 20%+ over NAV is a serious issue
This is where I'd be very careful.
Imagine:
SOL NAV = $100
You pay:
$125
If SOL subsequently compounds NAV at 10%:
NAV becomes:
$110
But if the market decides it should trade at NAV rather than a 25% premium, your share price could be:
$110
despite the underlying assets rising 10%.
That's the danger of buying a high-quality investment company at a substantial premium.
Conversely, ARG is currently giving you the opposite situation:
NAV = $100
Price:
~$85
If NAV grows 10%, you have:
$110 of assets
and potentially the discount narrows as well.
You therefore have two potential sources of return:
- NAV growth
- discount contraction
That is classic value-investing mathematics.
13. Balance sheet
This is another area where both look attractive.
ARG
No debt.
Extremely simple balance sheet.
SOL
SOL had approximately:
$3.8 billion liquidity
at FY2026, including $2.7 billion of cash and liquid investments.
So neither has the sort of balance-sheet leverage that would concern me in a Buffett-style analysis.
SOL, however, has a much more complicated balance sheet because of its subsidiaries, private assets and Brickworks integration.
14. The "moat" question
This is subtle.
ARG's moat is largely:
reputation + extremely low-cost permanent capital + long shareholder base + disciplined investment process.
SOL's moat is more interesting:
reputation + permanent capital + access to private opportunities + diversified investment capabilities + capital-allocation skill + long-term relationships.
The latter is potentially more powerful.
SOL's history goes back to 1903, and it has operated through numerous market cycles.
................
15. My Buffett-style scorecard
| Buffett characteristic | ARG | SOL |
|---|---|---|
| Simple business | ★★★★★ | ★★★ |
| Balance sheet | ★★★★★ | ★★★★½ |
| Low cost | ★★★★★ | ★★★ |
| Dividend reliability | ★★★★★ | ★★★★★ |
| Dividend growth | ★★★★ | ★★★★★ |
| Capital allocation | ★★★★ | ★★★★★ |
| Portfolio diversification | ★★★★ | ★★★★★ |
| Ability to exploit opportunities | ★★★ | ★★★★★ |
| Private-company exposure | — | ★★★★★ |
| Long-term track record | ★★★★★ | ★★★★★ |
| Current valuation vs assets | ★★★★★ | ★★ |
| Potential compounding engine | ★★★★ | ★★★★★ |
.....................
16. The really interesting comparison
If I were analysing these in the spirit of Buffett, I'd ask two completely different questions.
ARG
"How much am I paying for a dollar of assets?"
Answer:
~85 cents.
And those assets are approximately 80 established Australian businesses, with a 0.14% management cost and no debt.
SOL
"How much am I willing to pay for management's ability to compound a dollar of assets?"
That's the crucial question.
You're paying well above NAV because the market is assigning value to SOL's:
- management
- capital allocation
- private investments
- access to opportunities
- dividend history
- permanent capital
- diversification
The market is essentially saying:
"Soul Patts can create more than a dollar of value from every dollar of NAV."
That may prove correct—but you're paying for some of that expected value up front.
17. My biggest concern with each
ARG's biggest problem
The persistent NTA discount.
A 15% discount sounds attractive, but discounts can persist for many years. The recent history demonstrates this: LIC discounts have been a structural issue, and ARG has suffered from weaker benchmark-relative performance over some periods.
So the cheapness isn't necessarily a catalyst.
SOL's biggest problem
The premium to NAV.
You're buying an exceptional capital allocator, but you're paying considerably more than the underlying portfolio is currently worth.
If future returns disappoint, the combination of:
slower NAV growth + multiple/premium compression
could hurt shareholder returns.
18. And here's the fascinating part
There's an argument that ARG is actually more "Buffett-like" at today's price, despite SOL arguably being the better business.
Why?
Because Buffett has always emphasised:
price matters.
A wonderful business at an excessive price isn't necessarily a better investment than a good business purchased substantially below intrinsic value.
ARG currently gives you:
~15% discount to NTA
whereas SOL gives you:
~20%+ premium to post-tax NAV.
That's a very substantial valuation difference.
19. If I were building a $500,000 position
The mathematics become interesting.
ARG
At a ~$10.73 NTA and ~15% discount:
$500,000 buys approximately:
$588,000 of underlying assets
before transaction costs.
That's the embedded value of the discount.
SOL
At roughly $48 and ~$38.17 post-tax NAV:
$500,000 buys approximately:
$398,000 of current NAV
before considering any future value created by SOL's investments and capital allocation.
That's an enormous difference in starting valuation.
But SOL has demonstrated a stronger recent ability to grow NAV, and its investment universe is much broader.
Bottom line
For a Buffett-style analysis, I would think about them this way:
ARG
"Cheap assets + excellent income + extremely low cost."
The investment case is heavily dependent on buying the underlying assets at a discount and allowing the dividend stream and NAV growth to compound.
SOL
"Excellent capital allocator + diversified permanent capital + exceptional dividend growth."
The investment case is much more dependent on management continuing to compound NAV at attractive rates.
And that leads to what I think is the most important question in the ARG vs SOL decision:
Is SOL's superior capital-allocation capability worth paying ~20–30% above NAV for, when ARG lets you buy a high-quality Australian equity portfolio at ~15% below NAV?
That's the valuation question I'd focus on rather than simply comparing their dividend yields.
........
More Buffett analysis
| Metric | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Reported Net Profit After Tax (NPAT) | $498.8M | $364.2M | $2,191M |
| Shareholders' Equity | $8,999M | $9,410M | ~$11,375M |
| Reported ROE | ~5.5% | 4.06% | 9.12% |
| Trailing 12-Month (TTM) ROE | — | — | 17.2% – 19.8% |
- The Long-Term Baseline: Over the last decade, SOL’s median statutory ROE has historically sat around 6.4%. Warren Buffett typically screens for companies maintaining a consistent ROE above 15%. By statutory rules alone, SOL would fail a simple Buffett screen. [1, 2]
- The 2026 Accounting Spike: In 2026, SOL’s reported TTM ROE surged heavily, varying between 17% and nearly 20% depending on the exact measurement window. This massive variance is due to the $15 billion Brickworks merger finalized in late 2025/2026. This transaction eliminated a 56-year-old cross-ownership structure, triggering substantial one-off non-cash accounting gains and tax assets that artificially inflated statutory earnings ($2.191B NPAT). [1, 2, 3, 4]
- The Valuation Disconnect: Because SOL holds a vast portfolio of listed and unlisted assets at cost or equity-accounted values, statutory book value does not reflect true market value. Consequently, statutory ROE does not properly capture the compounding power of the business. Management instead focuses on Pre-tax Net Asset Value (NAV) returns, which reached a robust 10.2% in FY26, beating the ASX200 index by 4.2%. [1, 2, 3]
- Permanent Capital Vehicle: Like Berkshire Hathaway, SOL operates with permanent capital. It does not face redemption pressures like regular fund managers, allowing it to act opportunistically during market crashes. [1, 2]
- Active Portfolio Rebalancing & Private Market Shift: Buffett stresses the allocation of capital to where it earns the highest marginal return. In recent years, SOL has aggressively unwound historical, concentrated allocations (like its heavy positions in TPG, New Hope, and Brickworks) to pivot into Private Equity, Credit, and Real Assets (e.g., data centers, agriculture). [1, 2, 3]
- The "Premium to Book" Test: Buffett posits that the ultimate test of capital allocation is whether a dollar retained creates more than a dollar of market value. SOL trades at a premium to its Net Asset Value (and a Price-to-Book ratio of roughly 1.38x), proving that the market values management’s allocation abilities above the sum of the underlying assets. [1, 2, 3]
- The Dividend Philosophy: This is the primary divergence. Warren Buffett famously disfavors paying dividends because he believes he can compound those dollars more efficiently inside Berkshire. SOL, conversely, treats its dividend track record as its crown jewel, boasting 28 consecutive years of dividend growth. [1, 2]
- The Cost of Friction: Because of Australia’s unique franking credit system, SOL generates immense tax-effective value for local shareholders. Following the Brickworks merger, SOL unlocked over a billion dollars in franking credits. Distributing fully franked dividends is highly efficient for Australian investors, meaning SOL's capital return model is optimized for its domestic tax environment rather than strict Omaha doctrine. [1]
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