Author Topic: BAM - Brookfield Asset Management  (Read 308786 times)

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #720 on: October 04, 2018, 03:22:08 PM »
... BAM can do the spins of the LPs & selectively purchase LPs when they think they think they are cheap & spin them off at some time in the future.  Management can also maintain their ownership of the LP interests they now have in direct interests which will have a higher value. The reason why these structures make sense for others is to maintain control but Brookfield has control via the GPs.  What is point of holding the LPs in BAM if they can retain control of the LP assets via the GP (and thus access to permanent capital) & retain management ownership/incentive of some of the funds directly?  I just do not see the benefits as all the benefits folks have been discussing can be retained via an LP spin-off with a reduced discount. There would have to be some explanation but I think clients & investors would understand the economics have not changed but the structure has to increase everyone's value.

Maybe I am missing something about how the GP/LP structure works.  Can the LPs remove Brookfield as the GP if a certain number of LP units vote to remove them?  I do not think so.

Packer

Those are some positions and questions, that actually qualify - at least, to me , personally. Time to go BAM digging - again! [To me, it's [ still] about the understanding of the whole inner workings of the Brookfield sphere, going forward.]

Thank you for your post, Packer.
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bigbluffzinc

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Re: BAM - Brookfield Asset Management
« Reply #721 on: October 04, 2018, 11:52:16 PM »
I think people have liked seeing Flatt speak and I don't think I've seen these in this chat...  If this is old news in here my mistake...

https://www.youtube.com/watch?v=TpFOPHUhRBg

https://www.youtube.com/watch?v=pW8lAgpIPjo
Current Portfolio: VB, LBTYK, HWO, BAM, AGN, LNR, FB

shoeless

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Re: BAM - Brookfield Asset Management
« Reply #722 on: October 05, 2018, 04:44:43 AM »
thanks for sharing

Packer16

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Re: BAM - Brookfield Asset Management
« Reply #723 on: October 05, 2018, 07:08:28 AM »
One other benefit of the current structure is new funds can be started if capital is scarce but given BAMs size I wonder if that is an issue.  They only have one more vertical (credit) they can move into so maybe as a larger firm with funds with plenty of liquidity & the asset manager generating plenty of cash this structure may no longer be needed. 

Packer

Sportgamma

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Re: BAM - Brookfield Asset Management
« Reply #724 on: October 05, 2018, 08:25:08 AM »
Packer, I'm curious, do you think there is a level of float% that would close the discount. Let's say that BAM would spin off a number of BPY LP shares that would bring the float to 51%. Do you think that would be sufficient for the market to value BBY differently?

Packer16

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Re: BAM - Brookfield Asset Management
« Reply #725 on: October 05, 2018, 11:47:51 AM »
IMO if the amount of shares spun-off to make the total value of LPs and % of the total value of BAM less than 10%, then you are talking about less than a 2 to 3% discount (20 to 30% discount on 10% total value) which would be de minmus for me.  I believe even the discussion of a plan to do this by management would reduce the discount.
 
Packer
« Last Edit: October 05, 2018, 11:49:31 AM by Packer16 »

John Hjorth

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Re: BAM - Brookfield Asset Management Inc.
« Reply #726 on: October 05, 2018, 12:31:00 PM »
From an accounting perspective, BAM buying BPY units as recently taking place, is accretive to book value per BAM share. Minority interests are being bought out below BPY book value per BPY unit by the use of BAM cash [not BAM stock], from the perspective of BAM consolidated financials.
« Last Edit: October 05, 2018, 02:13:21 PM by John Hjorth »
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Spekulatius

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Re: BAM - Brookfield Asset Management Inc.
« Reply #727 on: October 05, 2018, 04:39:29 PM »
From an accounting perspective, BAM buying BPY units as recently taking place, is accretive to book value per BAM share. Minority interests are being bought out below BPY book value per BPY unit by the use of BAM cash [not BAM stock], from the perspective of BAM consolidated financials.

Are you sure about this? Why would buying BPY be accretive to BAM’s book value, unless BOY goes up in value of course and is valued at market.
To be a realist, one has to believe in miracles.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #728 on: October 05, 2018, 06:08:12 PM »
Yes, I'm sure - dead sure, Spekulatius,

- - - o 0 o - - -

Again, this is from an accounting perspective, not an IV perspective. [Important to note!]

- - - o 0 o - - -

BPY is not consolidated by BAM based on market value into BAM consolidated financials, instead the consolidation based on book values - "line by line", from BPY's book balance sheet.

That also means that minority holders of BPY [from a BAM perspective] in the consolidated BAM balance sheet are booked at book value.

Today, BPY closed at USD 19.94, while BPY equity per unit at End2018Q2 was 31.23 [p. 13].

Now where would you post this gain, if you were a BAM group accountant? - There are only two feasible answers: P/L or comprehensive income.
”In the race of excellence … there is no finish line.”
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Spekulatius

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Re: BAM - Brookfield Asset Management
« Reply #729 on: October 05, 2018, 07:12:45 PM »

Today, BPY closed at USD 19.94, while BPY equity per unit at End2018Q2 was 31.23 [p. 13].

Now where would you post this gain, if you were a BAM group accountant? - There are only two feasible answers: P/L or comprehensive income.

Ok, understood. BPY trades below book value. That makes sense.
To be a realist, one has to believe in miracles.