Author Topic: BAM - Brookfield Asset Management  (Read 308797 times)

Packer16

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Re: BAM - Brookfield Asset Management
« Reply #670 on: September 30, 2018, 04:57:27 PM »
I am not sure buy-backs would help as much as spinning off funds.  With buy-backs you are buying back an entity composed of 50 to 75% of a closed-end fund with a discount that is not unjustified & 25 to 50% of an asset management company.  If you spin off the funds you remove the discount first then buyback shares if the residual is undervalued.

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chrispy

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Re: BAM - Brookfield Asset Management
« Reply #671 on: September 30, 2018, 05:46:46 PM »
Bruce has said they are building the credit business to take advantage of the next cycle.

Packer, are the consistent dividends from the LPs along with the semi-predictable fees from the AUM what makes management believe they have a very predictable outcome 5-10 years from now?

With regards to always presenting that the company is undervalued; I like that they present how they value the company, do it the same way each year,  and reflected on what they projected in 2013 and how they have performed in comparison. BAM has a very unique structure that was quite difficult to understand up until recently. Their consistent valuation method has made it understandable. Growing the business with asset purchases, their way of organic growth, is much better then simply buying back shares. If cash piles up though, buy em up.
« Last Edit: September 30, 2018, 05:51:57 PM by chrispy »

Packer16

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Re: BAM - Brookfield Asset Management
« Reply #672 on: September 30, 2018, 06:20:22 PM »
IMO it does not matter what management thinks in regards to the hold co discount.  The spin-off will remove the discount from holding the funds & we can see if the market will truly misprice the asset manager.  I am taken the discount as a given versus trying find ways to reduce it because I have never seen one reduced for an extended period of time.  Why try to fight the market when with a spin-off you do not have to.

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bizaro86

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Re: BAM - Brookfield Asset Management
« Reply #673 on: October 01, 2018, 06:33:38 AM »
The big stakes in the subs give them the ability to take huge leverage at the hold co based on the value of those stakes. Provides them extra optionality if the markets freeze up again.

And they always have the option to do a spin, so any time they decide to capture that value they could. There is a time value argument against waiting, because capturing the money later isn't as good as capturing it now.

I think it would probably be value maximizing to spin off the subs, at least partially. But I understand why they don't...

Spekulatius

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Re: BAM - Brookfield Asset Management
« Reply #674 on: October 01, 2018, 06:49:34 AM »
Doesn’t having a stake in the subs or event them from losing control over them? I think at least theoretically, it is a possibility to lose control, if an activist came in.
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Packer16

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Re: BAM - Brookfield Asset Management
« Reply #675 on: October 01, 2018, 07:45:34 AM »
Why would you want BAM to lever up at the hold co when you can do it much cheaper vis someone like IB?  IMO the increased leverage at the hold co just adds more risk for everyone while the leverage by individuals holding fund stakes allows investors to leverage to taste.

As to loosing control, the funds that are traded are LPs so I do not think BAM can loose control unless the spin-off the GP which would not make sense due to potential loss of control.

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merkhet

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Re: BAM - Brookfield Asset Management
« Reply #676 on: October 01, 2018, 08:21:36 AM »
Maybe I'm missing something, but if the idea is that a spin of the subs will close/eliminate the discount, wouldn't you want them to repurchase a bunch of shares before they spin out the subs?

Shane

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Re: BAM - Brookfield Asset Management
« Reply #677 on: October 01, 2018, 09:00:02 AM »
Maybe I'm missing something, but if the idea is that a spin of the subs will close/eliminate the discount, wouldn't you want them to repurchase a bunch of shares before they spin out the subs?

I'm confused as well...

Spos

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Re: BAM - Brookfield Asset Management
« Reply #678 on: October 01, 2018, 09:26:15 AM »
Maybe I'm missing something, but if the idea is that a spin of the subs will close/eliminate the discount, wouldn't you want them to repurchase a bunch of shares before they spin out the subs?

I think this also depends on management's (and important shareholders') horizon.  And I don't really know these guys, but they seem to have the vast majority of their personal wealth in BAM and they are definitely long-term investors.  This again reminds of Loews.  Loews shares have traded at a discount for years and for for years, Loews just continually buys back shares.  The way I see that strategy is that if you know that you will be holding the shares for a very long time (and you already have control), does it not make sense that the shares perpetually trade at a discount so that you can keep buying them at that discount?

Packer16

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Re: BAM - Brookfield Asset Management
« Reply #679 on: October 01, 2018, 11:34:23 AM »
My assumption is management's choices are buyback or spin-off.  Spin-off IMO adds more value.  If you buyback before the spin-off that would be the best but I have not heard it to be management's intention to do any full spins.  IMO that is the first step.

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