Author Topic: BAM - Brookfield Asset Management  (Read 324942 times)

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #380 on: January 09, 2018, 10:41:24 AM »
Is BAM.A  the right ticker for toronto ?
dutchman,

BAM Annual Report 2016, p. 172 is the place to read.
”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


no_free_lunch

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Re: BAM - Brookfield Asset Management
« Reply #381 on: January 09, 2018, 10:45:36 AM »

Partners Value Investments LP can be purchased at double digit discounts (at times) and the majority of their book value is in BAM stock. It's also levered up with preferred stock. Units are thinly traded as about 90% of the float is owned by BAM management. However, if you are able to get an order in (with patience) and double digit discounts to NAV (I've seen it near 20% before), and are willing to wait a few years, you should do even better than if just owning the common in that scenario.

As for valuation of BAM stock -- I'd recommend first checking out their investor presentations. They do a pretty good job on explaining on they value their company and their estimates tend to be on the conservative side.

Right now it looks like they are trading at a 20% premium to book (using Sept 30 book).  Is that really a good deal at these prices?  I know you say to wait for a double discount but.. that's not where it's at.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #382 on: January 09, 2018, 11:06:14 AM »
Seems like it wouldn't be hard to bring that expertise in house via hiring... After all, paying a team $10-20m a year is nothing if they can put billions to work.

Shane & villainx,

Mr. Flatt and his management team aren't - and haven't become - rich just because they are good at what they are doing.

BAM Annual Report 2016, p. 155:

2016YE outstanding shares: 958,168,417.
2016YE unexcersised options etc.: 43,798,733.

2016YE total diluted shares: 1,001,967,150.
« Last Edit: January 09, 2018, 11:10:10 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

chrispy

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Re: BAM - Brookfield Asset Management
« Reply #383 on: January 09, 2018, 05:32:49 PM »
There was talk about carried interest. This is from the q3 2017 letter:

"
It is important to understand that fund profit, which drives carried interest, in a fund lifecycle is typically generated in three stages. In the early years, the fund generates minimal carried interest while investments are identified and capital is being deployed. At the mid-point of the fund lifecycle, capital has been fully deployed, value is being created and the fund assets should be generating a return above the preferred return. At this point the pace of carried interest generation accelerates. In the later stages the fund will continue to generate carried interest, albeit at a decelerated rate, until all remaining assets are sold and the fund is wound up.

Looking forward, carried interest should become an increasingly larger part of our asset management earnings profile. While we have $41 billion of carry eligible capital at September 30, only 59% has been deployed, and a substantial portion is within funds that are of relatively recent vintages. Accordingly, our overall carry profile is still within that early stage. We expect generated carried interest to increase as we deploy the remaining dry powder, and our operational improvements and asset repositionings take hold. While we generate carried interest throughout the life cycle of the fund, we defer recognition in FFO until the carried interest is no longer subject to clawback. This is when the preferred return has been achieved through sales, cash has been paid and there is no significant uncertainty remaining. We do, however, report to you each quarter the amount of carry generated within our funds based on investment performance to date. We expect to realize about 60% of the potential carried interest within four to seven years and based on current funds in place we expect to earn $8 billion over the next 10 years.

As an example, the recent sale of a European industrial real estate business, from one of our real estate funds, generated $300 million of carried interest. Given that we do not book carry until the end of life of a fund, we will not recognize this carried interest in our results, as it is still subject to clawback. Despite this, it is an “unrealized asset” and this puts us well on our way to realizing substantial
carried interest from this fund.
"
« Last Edit: January 09, 2018, 05:37:39 PM by chrispy »

villainx

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Re: BAM - Brookfield Asset Management
« Reply #384 on: January 09, 2018, 05:34:17 PM »

Mr. Flatt and his management team aren't - and haven't become - rich just because they are good at what they are doing.


Was this intended to be a criticism of management? 


John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #385 on: January 10, 2018, 06:24:43 AM »
I was just trying to place some factual counterweight & mild pushback on Shanes post about a management compensation of 10 - 20 M, and giving my own confirmation bias about BAM some massage. I haven't made any calculations or studied it further, but to me it is evident that the total compensation to the BAM management team is in a different range.
”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

Shane

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Re: BAM - Brookfield Asset Management
« Reply #386 on: January 10, 2018, 11:52:22 AM »
Hi John,

I pulled $10-20m out of thin air, totally hypothetical.  My line of thinking was that if Berkshire Hathaway Energy has a team capable of analyzing the deals already (they have a strong M&A track record), it may be as easy as bringing in a small team to fill in the gaps they have operationally.  No idea what it would cost to lure them away, maybe $20m a year for a team of 4-5? 

I was just trying to illustrate that a good team would be well worth the investment if they can put billions to work.  Greg Abel's team are already working on tons of deals in the utility space, is a toll road/port that much different?

cubsfan

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Re: BAM - Brookfield Asset Management
« Reply #387 on: January 10, 2018, 11:58:02 AM »
I think you have a totally different issue when you are dealing with different countries, tax laws, regulatory frameworks, etc , when it comes to establishing operations in these geographies. BAM has that infrastructure
in addition to the operational expertise. Berkshire doesn't - and I don't thing they want to, unless all the management is in place.
« Last Edit: January 10, 2018, 12:00:10 PM by cubsfan »

Shane

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Re: BAM - Brookfield Asset Management
« Reply #388 on: January 10, 2018, 12:33:42 PM »
Cubsfan - good point.  Maybe BHE already looks at some less traditional infrastructure in North America and just hasn't come across an interesting deal.  BAM has been public that they see few deals in the US.

chrispy

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Re: BAM - Brookfield Asset Management
« Reply #389 on: January 10, 2018, 12:43:33 PM »
Bam and all funds are down 3%ish... Small and probably a blip on the radar but is this what the market thinks of Brookfield if interest rates rise? Gets back to the earlier discussion on inflation