Chart Review – W.H. Soul Pattinson (SOL)

By Kenneth Robson on July 11, 2017 • ( 1 )

Those readers unfamiliar with the dispute, should read this well-written article by Carolyn Cummins printed in today’s Sydney Morning Herald.

July 11 2017 – 12:15AM

Perpetual cops a Brickworks through the window

Carolyn Cummins

The Federal Court has thrown a brick through the windows of investment house Perpetual. And not before too long if you’re sitting in the Millner family’s camp.Justice Jayne Jagot is the thrower-in-chief after she found the cross-holdings of Brickworks and Washington H. Soul Pattinson linked to the Millners did not impact on teeny tiny shareholders such as one of Australia’s largest wealth managers.Sure, Perpetual had a mum and dad type investor on its side at one point or another over the years in the form of venture capitalist Mark Carnegie, who’s definitely a dad but not really a retail investor.At stake, according to the minority investors, was $450 million in uncorked value on both entities.The cross-shareholdings were set up four decades ago when it was the 1970s and corporate regulation had a different vibe and probably wore flares. It means that today Soul Patts owns a 44 per cent stake in Brickworks and Brickworks has a 42.7 per cent stake in Soul Patts.Perpetual had argued the cross-holdings were oppressive to other shareholders because they allegedly disenfranchised minority shareholders and allegedly “entrench the incumbent boards and as a result, the control of the Millner family, and depresses the price of shares in each company”.The Millner clan led by Robert Millner is one of Australia’s richest and they view their holdings in both companies as “ghost holdings”, which we imagine is because they are annually haunted by both groups’ dividends.

The stoush started about 10 years ago but really heated up in 2013 when Brickworks sued Carnegie’s outfit M.H. Carnegie for rattling its cage and Perpetual filed a counter-suit.But Justice Jagot found Perpetual had failed in its attempt to prove the Millner family maintains the cross-holdings in order to entrench the control of the companies. “The cross-shareholding may reasonably be seen as having provided each company with material benefits as a result of diversification, which has reduced earnings volatility,” she said.

http://www.smh.com.au/business/cbd/perpetual-cops-a-brickworks-through-the-window-20170710-gx7z11.html

12 month Daily candlestick chart of SOL

SOL Dy july 17

5 Year Weekly Candlestick Chart of SOL

SOL Wk July 17

Technical features:

There has been a primary uptrend for the past two and a half years on the weekly chart which is still intact.
An impulsive move higher from the beginning of 2017 carried the share-price to resistance at $19 from $14.50, and was reached at the end of April 2017.
It would seem that this legal dispute is behind the retracement of the share-price to the 61.8% Fibonacci retracement level.
The last price action is in the form of an upwardly sloping triangular consolidation pattern, from which the price could break-out in either direction, but is perhaps more likely to do so to the downside.
Trend-line support is at about $14.50. If price action respects such support, it could prove to be a profitable entry level for new investors, and investors wishing to increase their shareholding.