Author Topic: BAM - Brookfield Asset Management  (Read 328854 times)

Gregmal

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Re: BAM - Brookfield Asset Management
« Reply #1020 on: May 23, 2019, 05:15:48 PM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.


Spekulatius

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Re: BAM - Brookfield Asset Management
« Reply #1021 on: May 23, 2019, 05:30:31 PM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.

As ai keep reminding everyone, TOO wasn’t the first one. GGP was a much larger and way more public screw job than TOO. I also think there were other instances like this, but my memory fails mRNA. it’s not a reason not to invest in BAM, imo. If anything, it is a reason to invest in BAM.

As far as the other entities are concerned, if prices get too depressed, expect a bear hug too. they surely can come up with some financial engineering - buying up depressed units, selling IDRs back to the LP, then putting them under self directed management and reissuing units again for a higher price.

Heads up, BAM wins, tails up BAM find a way to win too.
To be a realist, one has to believe in miracles.

gokou3

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Re: BAM - Brookfield Asset Management
« Reply #1022 on: May 23, 2019, 05:40:36 PM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.

As ai keep reminding everyone, TOO wasn’t the first one. GGP was a much larger and way more public screw job than TOO. I also think there were other instances like this, but my memory fails mRNA. it’s not a reason not to invest in BAM, imo. If anything, it is a reason to invest in BAM.

As far as the other entities are concerned, if prices get too depressed, expect a bear hug too. they surely can come up with some financial engineering - buying up depressed units, selling IDRs back to the LP, then putting them under self directed management and reissuing units again for a higher price.

Heads up, BAM wins, tails up BAM find a way to win too.

Forest City, BPO, and Rouse are arguably other recent examples.  That said, I doubt they will screw the Brookfield LPs (BPY BEP BIP BBU).  It is to their benefit to keep them listed and valuation high to provide additional low-cost funding sources and to earn IDR from them.


Pondside47

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Re: BAM - Brookfield Asset Management
« Reply #1023 on: May 23, 2019, 06:19:59 PM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.

I agree with a lot of what you said but I take issue with your over simplified cynical generalization. Nobody thinks we are owed anything or being treated specially. Every investment we make is a bet on the future behavior of the controlling parties, whether its management or controlling shareholder.  We do expect to be treated fairly. What happened to fiduciary duty? I don't want to turn this into a TOO thread, but what pissed people off was the bait and switch. Brookfield posted as a strategic sponsor and have people spent two years invested with them. Now that things are much improved, they decide to take advantage of the low stock price to get a bit more return. They changed narrative and bent facts to justify their low bid. They have totally forgot about their fiduciary duty as the GP of the partnership. Saying self-interest rules the day, you have no clue why people go into investment thinking they are owed anything is not conducive to the discussion. Every single investment we make, we think we are owed at least ethical behavior. Otherwise, theoretically every management can bankrupt a company on purpose and get themself a better deal out of the bankruptcy process by siding with the vulture fund.
« Last Edit: May 23, 2019, 06:46:57 PM by Pondside47 »

chrispy

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Re: BAM - Brookfield Asset Management
« Reply #1024 on: May 24, 2019, 03:16:33 AM »
With regards to GGP, if the share price won't reflect fair value and is a bargain then anyone can buy the units. It just so happens that BAM/subs can buy all of the units.

That is what I have struggled with here. Brookfield hyped GGP for like 7 years but the world was terrified of malls going under. No one in the market was buying up GGP so whats the big deal that Brookfield did?

Spekulatius

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Re: BAM - Brookfield Asset Management
« Reply #1025 on: May 24, 2019, 04:07:28 AM »
With regards to GGP, if the share price won't reflect fair value and is a bargain then anyone can buy the units. It just so happens that BAM/subs can buy all of the units.

That is what I have struggled with here. Brookfield hyped GGP for like 7 years but the world was terrified of malls going under. No one in the market was buying up GGP so whats the big deal that Brookfield did?

They gained control without paying premium. In fact one could argue they artificially suppressed the stock. They certainly bought when the stock was at or close to a multi year low. Control is very valuable with real estate. So basically, when BAM has a minority interest, they basically write themselves a permanent call option on a total takeover. They also prevent anybody else from making a bid. I had no dog kn this fight and neither do I with TOO. I stated this before that if you think that BAM will do well, there is no point investing “alongside” BAM or even consider any of their vehicles, because with a GP/LP structure, the GP almost always comes out ahead.
To be a realist, one has to believe in miracles.

Gregmal

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Re: BAM - Brookfield Asset Management
« Reply #1026 on: May 24, 2019, 05:51:54 AM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.


I agree with a lot of what you said but I take issue with your over simplified cynical generalization. Nobody thinks we are owed anything or being treated specially. Every investment we make is a bet on the future behavior of the controlling parties, whether its management or controlling shareholder.  We do expect to be treated fairly. What happened to fiduciary duty? I don't want to turn this into a TOO thread, but what pissed people off was the bait and switch. Brookfield posted as a strategic sponsor and have people spent two years invested with them. Now that things are much improved, they decide to take advantage of the low stock price to get a bit more return. They changed narrative and bent facts to justify their low bid. They have totally forgot about their fiduciary duty as the GP of the partnership. Saying self-interest rules the day, you have no clue why people go into investment thinking they are owed anything is not conducive to the discussion. Every single investment we make, we think we are owed at least ethical behavior. Otherwise, theoretically every management can bankrupt a company on purpose and get themself a better deal out of the bankruptcy process by siding with the vulture fund.

I just think that the expectation to be treated fairly or expecting management to have ethical behavior, especially in the financial world, is setting oneself up to be taken advantage of. In the choice between ethics and dollars, I can count on one hand the number of people I've met who will always put ethics first. Out of the rest, some are just better at convincing others they will, but will ultimately chose the dollar anyway. The latter is kind of what Bruce Flatt seems to be.

BG2008

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Re: BAM - Brookfield Asset Management
« Reply #1027 on: May 24, 2019, 06:51:08 PM »
While interning at a small brokerage firm in my early 20's, I saw two guys, each making $1M a year plus, get into a fist fight over who was responsible for paying a $75 ticket charge.

When it comes to money, people are animals. Especially in the financial world. I have no clue why people go into investments thinking they are owed anything or going to be treated specially. Self interest rules the day, whether its Fast Eddie plundering Sears into bankruptcy, the Oracle of Omaha refusing to put capital to work via buybacks or paying dividends almost solely because he wants to make one last big acquisition for legacy purposes, or BAM and their subs forcing a below market takeover through. Even if you do find an awesome and generous manager, you'll never get hurt being skeptical. You will get flattened thinking Fast Eddy has your back though.


Gregmal,

I think you need better friends/associates and stop hanging out with the folks at CTO.  Find some better people to invest with.  Meant to be a joke, but maybe there's a bit of truth in it as well.  No malice intended. 

I agree with a lot of what you said but I take issue with your over simplified cynical generalization. Nobody thinks we are owed anything or being treated specially. Every investment we make is a bet on the future behavior of the controlling parties, whether its management or controlling shareholder.  We do expect to be treated fairly. What happened to fiduciary duty? I don't want to turn this into a TOO thread, but what pissed people off was the bait and switch. Brookfield posted as a strategic sponsor and have people spent two years invested with them. Now that things are much improved, they decide to take advantage of the low stock price to get a bit more return. They changed narrative and bent facts to justify their low bid. They have totally forgot about their fiduciary duty as the GP of the partnership. Saying self-interest rules the day, you have no clue why people go into investment thinking they are owed anything is not conducive to the discussion. Every single investment we make, we think we are owed at least ethical behavior. Otherwise, theoretically every management can bankrupt a company on purpose and get themself a better deal out of the bankruptcy process by siding with the vulture fund.

I just think that the expectation to be treated fairly or expecting management to have ethical behavior, especially in the financial world, is setting oneself up to be taken advantage of. In the choice between ethics and dollars, I can count on one hand the number of people I've met who will always put ethics first. Out of the rest, some are just better at convincing others they will, but will ultimately chose the dollar anyway. The latter is kind of what Bruce Flatt seems to be.

John Hjorth

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« Last Edit: May 30, 2019, 02:53:36 AM by John Hjorth »
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John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1029 on: May 31, 2019, 02:42:25 PM »
Basically, since my post #1013 of May 21st 2019, I've sidestepped BAM & subs, simply just by trying to "look around how things work other places".

I've looked at BlackStone & BlackRock. This post is about BlackStone.

Blackstone has for years applied a business model similar to BAM, but disguised [technically] another way. Not even the investors "nearest the core" of the business are assured against anything taking advantage of them. If you grab the last BX 10-K & 10-Q, it's all explained there [, in "risk section"].

The interesting part of my look at BX [related to BAM] is that BX somehow is coming back to its senses, by the decision [April 2019, I think], to convert from an L.P. to a C-corp. Now somebody qualified for doing so has to explain to me, how that is even possible, to obtain/maintain existing power structure.
« Last Edit: May 31, 2019, 02:44:04 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