Author Topic: BAM - Brookfield Asset Management  (Read 324927 times)

villainx

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Re: BAM - Brookfield Asset Management
« Reply #250 on: October 26, 2017, 08:56:42 AM »
I'll elaborate with regards to the partnership and pros and cons for different regular vs tax advantaged accounts.

Foreign tax issues

UBTI - though it might be minimal and partnerships actively seek to avoid it

K1 - never had an issue with this, but not sure how it effects tax advantage account.

Reduction of cost - I heard that if it's long term hold, is it return of capital might several reduce capital basis? Which would be a reason for inclusion in tax advantage account.

I might be missing something.

When do you get your K-1s?  I've always been paranoid they will come in late.

I only have BIP and the final K1 comes later, usually around March.  There is an initial one earlier in the year, but there's almost always an amended final one. I don't recall if there is any substantial difference cause I don't pay close attention to the earlier k1s.


John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #251 on: October 26, 2017, 01:42:43 PM »
Thanks for bringing the taxation of Brookfield L.P.s up here. They are "no-go"s for me, also PVF.UN mentioned by Eric, alone because of  "flow through" taxation of the unit holders.

- - - o 0 o - - -

I have been thinking a bit about BAM competitors today. I found a Willis Tower Watson report called "Global Alternatives Survey 2017". There seems to be a yearly edition of it.

Link.

[There is a download button to press on the page, to get the report.]
« Last Edit: October 26, 2017, 01:44:16 PM by John Hjorth »
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gokou3

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Re: BAM - Brookfield Asset Management
« Reply #252 on: October 26, 2017, 02:19:00 PM »
Eric, may I ask why are you invested in Partners Value instead of directly in BAM?  Is it a leveraged play or was there a discount to NAV when you got in?

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #253 on: October 28, 2017, 03:19:44 PM »
gokou3,

PVF.UN is levered with preferred stock also, in layers.


« Last Edit: October 28, 2017, 03:21:37 PM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

karthikpm

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Re: BAM - Brookfield Asset Management
« Reply #254 on: October 29, 2017, 10:02:10 AM »
http://www.pressreader.com/canada/the-globe-and-mail-alberta-edition/20171027/281784219345476

BAM is buying some expensive canadian commercial real estate ( google now showed me the link as I was staying at this hotel, little scary when I think about how these topics appear )

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #255 on: October 29, 2017, 10:57:15 AM »
This afternoon I did my self the favour to listen to the 27th September 2017 Brookfield Asset Management Investor Day  2017 MP3 while at the same time having the presentation open on my monitor, while listening.

Great experience, I will just say, and I'll recommend doing so to everyone interested just a bit in BAM.

On the Brookfield main webpage there is a link to a Forbes interview and article about Mr. Flatt and BAM in the 16th May 2017 edition of Forbes.

Especially one sentence in that article has a lot of appeal to me - the last one ... - I suppose it has to you, too:

Mr. Flatt, for the record:

Quote
Over the next 20 years, we are going to make an enormous amount of money.

- - - o 0 o - - -

Push back, please. [Financial reporting matters has already been mentioned in this topic by fellow board members.]
« Last Edit: October 29, 2017, 11:05:22 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

plato1976

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Re: BAM - Brookfield Asset Management
« Reply #256 on: October 29, 2017, 09:31:25 PM »
I may be making a mistake here, but I don't understand the valuation, even after this year's run-up.
So from this year's investor's presentation we have:

($millions)                            2017 2016
Fee related earnings            $ 732 $ 639
Distributions received          1,385 1,251
Realized carried interest         152 15
Total                               $ 2,269 $ 1,905

I believe this earning number 2.2B doesn't include the appreciation of BAM's own capital invested, it only includes the distribution from these invested capital, which is 1385M above.

In another slides it's mentioned that the total return from its own capital is 18% (5% is the distribution and 13% is capital appreciation, I assume). Even if we assume this 18% number won't sustain and assume a more realistic 5%/5% in the future and add back the capital appreciation back to the earning I get 3.6B earning power. This doesn't assume an esp rosy capital appreciation prospects, and doesn't take the carry increase potential into consideration. Compared with a 40B market cap, this seems pretty cheap (even doesn't consider a few well-know growth factors)

Any mistake in my calculation/logic?

In that $104 slide, they have a line for
carried interest and fee related interest
but no line for the 'distributions received' which is a line item on page 64...Is that included in the first two?

I see they generated 1.8 billion free cash flow today.
The 2022 prediction would be (if outflows grow a little slower and the distributions received stay the same) $2.7 billion + $1.4 billion = $3.8 billion - ~$800m outflows = $3 billion/year.

At blended average of 15x that's $45 billion in 5 years based on multiple of fcf ($40 billion today's market cap)
or at 20x = $60 billion.

It'd be nice to know what they are predicting for the distributions . But it seems but I don't see more than a double in 5 years or an 80 billion market cap either way.

Generally, I'd say a two column approach of net invested capital and some multiple of asset management fees is more appropriate.  Using FCF only doesn't give them full credit for compounding invested capital as the increasing value largely doesn't show up in earnings/FCF.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #257 on: October 30, 2017, 02:37:32 AM »
Yes, Plato,

I understand it the same way as you. Furthermore - as also mentioned earlier by racemize -, I think the capital appreciation of 15 percent that you are referring to is progress in the stock price, not progress in book value per share.

Personally, I'm contemplating to do a calculation of the BAM track record since introduction of IFRS accounting for BAM ['09] the Berkshire/Fairfax/Markel way, with dividends reinvested.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

Uccmal

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Re: BAM - Brookfield Asset Management
« Reply #258 on: October 30, 2017, 04:23:32 AM »
Article in Bloomberg about Buffett that relates to what BAM does.

https://www.bloomberg.com/news/articles/2017-10-29/everybody-wants-to-invest-like-buffett-here-s-what-it-takes

Talks about the time and expertise involved in making long term whole company investments.  Buffett implemented this style over decades.  BAM has been at it for generations but has really refined its focus under Bruce Flatt as an asset manager and long term owner. 

Private equity and hedge funds want to copy this style but just dont have the resources or long term expertise to do it very well. 
GARP tending toward value

plato1976

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Re: BAM - Brookfield Asset Management
« Reply #259 on: October 30, 2017, 05:27:14 AM »
I suppose eventually the capital appreciation has to be reflected on the book value, when the investment is sold, the gain is realized and/or the fund is due&closed? On average what's their funds' life cycle?

Yes, Plato,

I understand it the same way as you. Furthermore - as also mentioned earlier by racemize -, I think the capital appreciation of 15 percent that you are referring to is progress in the stock price, not progress in book value per share.

Personally, I'm contemplating to do a calculation of the BAM track record since introduction of IFRS accounting for BAM ['09] the Berkshire/Fairfax/Markel way, with dividends reinvested.