Author Topic: BAM - Brookfield Asset Management  (Read 221703 times)

menlo

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BAM - Brookfield Asset Management
« on: October 18, 2011, 02:24:33 PM »
I believe this one used to be followed on this board, but my search didn't turn up anything of note (recently - and my apologies if I missed something).  I'm curious if anyone owns it or has it on a watch list.

According to the various presentations at their website, it trades at a 20-30% discount to NAV.  IF Europe doesn't fall apart, and IF China has a soft landing (or no landing...), and IF the latest US PPI number shows some follow-through (up 0.8% in September), then their global hard/real asset approach might garner some interest going forward.  And now that I think about it, IF Europe falls apart, that might be an opportunity for them to pick up distressed assets.

Any thoughts are most welcome - I think the 3rd Avenue Fund group likes the company, and their quarterly reports might have additional detail, too.
« Last Edit: October 18, 2011, 04:09:35 PM by Parsad »


augustabound

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Re: Brookfield Asset Management
« Reply #1 on: October 18, 2011, 03:41:38 PM »
IF Europe falls apart, that might be an opportunity for them to pick up distressed assets.

Any thoughts are most welcome - I think the 3rd Avenue Fund group likes the company, and their quarterly reports might have additional detail, too.

Yes, and yes.  They'll be buyers if things get cheap.
 
I'm currently going through all Third Avenue letters to find mention of BAM since they first bought Brascan around 2000.  So far, each letter just mentions how cheap Brascan/Bam is on an adjusted NAV basis.
Their Third Avenue real estate fund has held Brookfield Properties as long, if not longer than the value fund has held Bras/BAM.  But still, only mentions of trading at cheap relative to adjusted NAV. 

From what I can tell, and please someone correct me if I'm wrong, TA version of adjusted NAV is basically a tangible book value unless the footnotes show any hidden liabilities like leases etc.  Uncle Marty Whitman has said many times that inventories can be a long term fixed asset (as in retail) but that doesn't really apply to BAM. 
(That was another reason I've been going through every letter, including the other TA funds, was to find out their version of NAV. 
"Serenity now, insanity later." - Lloyd Braun

beerbaron

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Re: Brookfield Asset Management
« Reply #2 on: October 18, 2011, 04:05:48 PM »
There is some mention by Whitman about BAM in the following video collections.

http://www.bengrahaminvesting.ca/Resources/videos.htm

BeerBaron

augustabound

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Re: Brookfield Asset Management
« Reply #3 on: October 18, 2011, 04:27:56 PM »
There is some mention by Whitman about BAM in the following video collections.

http://www.bengrahaminvesting.ca/Resources/videos.htm

BeerBaron

I forgot about the resources there, thanks for the link.

Also forgot to mention, I started looking at BAM again after seeing a thread here about someones question about the future capital allocators and Bruce Flatt of BAM was suggested by a few people.
"Serenity now, insanity later." - Lloyd Braun

dwy000

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Re: BAM - Brookfield Asset Management
« Reply #4 on: October 18, 2011, 06:39:08 PM »
You might want to check some of the Bruce Berkowitz discussions as well.  He holds a big position and has had some favorable things to say about them, especially with respect to their role in the GGP restructuring.

mranski

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Re: BAM - Brookfield Asset Management
« Reply #5 on: October 19, 2011, 10:56:41 AM »
This investor writes about BAM in his newsletters. I have found it quite useful, plus other commentary is good.

http://www.tiddcapital.com/


augustabound

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Re: BAM - Brookfield Asset Management
« Reply #6 on: March 17, 2012, 03:35:49 AM »
"Serenity now, insanity later." - Lloyd Braun

thepupil

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Re: BAM - Brookfield Asset Management
« Reply #7 on: March 17, 2012, 06:22:20 AM »
I own Brookfield Asset Management. I highly recommend reading their supplemental for 2011

 http://www.brookfield.com/content/financial_reports/supplemental_information-86.html

Also read their most recent shareholder letter. As the author of the above link points out BAM suffers from asset complexity but is making moves to change that by consolidating its holdings into flagship public entities, which hopefully will re-rate the stock.

The bull case for BAM is you are buying a "discounted" portfolio of best in breed infrastructure assets that provide some level of inflation protection and high IRR through non recourse single asset leverage.

I put discounted in quotations because in order to get comfortable with owning BAM you have to get comfortable with the prices currently being paid for trophy office real estate in the USA, Canada, and Australia. This is the biggest risk to BAM, in my opinion. Their internally calculated NAV (which is detailed quite nicely in the supplemental) is dependent upon cap rates in the 5-6% range.

As interest rates have declined and the desire for hard assets and yields has increased (REIT valuations are historically high, for example), much of BAM's earnings have been derived from revaluation of its portfolio at lower rates and higher prices, so buying BAM at 11X earnings includes a large component of "unrealized appreciation" in the earnings component.

I think Brookfield's management is top-notch, their asset quality is very high (ie World Financial Center), and they are conservatively capitalized at the corporate level, but the margin of safety in buying assets at a discount could disappear in a world in which capitalization rates rise to higher than historically low levels. Also they are heavily invested in commodity driven economies (Australia, Canada, Brazil) so you are also investing in the commodities supercycle/China/emergin markets story, which I think carries significant risks

All that being said, I think BAM is one of the more intelligent ways to invest in trophy real estate and infrastructure

I have been working on a valuation model but haven't gotten around to it because I work a lot and investing is my hobby... but here is a basic list of what BAM owns  :

Stakes in Publicly traded corps
Brookfield Office Properties
Brookfield Office Canada
General Growth Properties
Brookfield Renewable Energy
Brookfield Infrastructure Partners
Brookfield Residential Properties
Acadian Timber
Brookfield Real Estate Services

Other Assets
Corporate Cash
Canary Wharf Group 22% Interest
Brazilian Retail Properties (35% Owned Private Fund)


The 22% interest in Canary Wharf Group is a nice hidden asset.










jeffmori7

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Re: BAM - Brookfield Asset Management
« Reply #9 on: November 14, 2012, 09:08:19 AM »
For those interested by Brookfield, here is a nice summary of their activities and their roadmap for the next ten years :

https://www.brookfield.com/_Global/42/img/content/File/Investor%20Relations/Presentations/2012/F_2012_BAM_IR_Day_October_11.pdf


And here is the latest letter to shreholders for the Q3, where Flatt speaks again about their position on GGP and the whole affair with Ackman :

http://www.brookfield.com/_Global/42/documents/relatedlinks/5140.pdf