Author Topic: BAM - Brookfield Asset Management  (Read 365195 times)

John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
”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


John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
Re: BAM - Brookfield Asset Management
« Reply #1111 on: October 02, 2019, 04:40:33 PM »
Eric Sprague on SA [October 2nd 2019] : Brookfield Asset Management Is Firing On All Cylinders.

Eric Sprague's writings about Brookfield on SA has always had appeal to me. To me, this piece is on overall basis, but still based on deep and detailed knowledge of the whole system of companies. What he's doing here is to share his thinking about his personal adjustments to the intrinsic value of BAM as represented by BAM itself. We [the BAM investors here on CoBF] should really pursue this overall line of thinking and method, and discuss it actively with each other here.

- - - o 0 o - - -

"Firing on all cylinders" is a Viking thingy here on CoBF related BAC, btw! [ : - D ]
”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

jfan

  • Newbie
  • *
  • Posts: 33
Re: BAM - Brookfield Asset Management
« Reply #1112 on: October 02, 2019, 07:21:02 PM »
As a slight aside on the topic of BAM, is their rationale for publicly stating (marketing?) their intrinsic value. This is very similar to how Berkshire (and Wesco used to) discuss how they want people to think about their intrinsic value.

I've wonder if there is a more strategic reason for doing so. I wonder if they are capitalizing on the market's psychological tendencies in order to achieve more stability in their share prices. This, in turn, provides them the optionality to buyback their shares as well as use their shares as acquisition currency.

Certainly, by stating their plan value, it may anchor market expectations during normal times and give an appearance of transparency that facilitates trust in its shareholder base. (Everything about investing in BAM is really about trust in management, like most asset managers).

Anyways, just a random thought I had to get off my mind.

« Last Edit: October 02, 2019, 07:22:41 PM by jfan »

John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
Re: BAM - Brookfield Asset Management
« Reply #1113 on: October 03, 2019, 04:11:00 AM »
BAM and its subsidiaries will deliver.  To an extent it is a black box but no more than Berkshire, or Fairfax.  Bruce goes to great lengths to try to explain the company but it is so vast. 

With BAM you can see the real assets (actual pictures) and understand them.  You can see how cheaply they get their debt.  You can see how easily they raise equity and money for their funds. 

Bruce Flatt and company is the closest thing I can imagine to a 52 year old Buffett which is when Berk. shifted to owning more and more full businesses. 

I think the platform they have built over the last 15 years is just hitting the sweet spot.  The fee income or carried interest is growing at a real quip.

But do I understand the whole company.  Not a chance.  They have said they will deilver 20% growth going forward for five years based on existing projects and money raises.  This does not even include larger future raisings. 

If you were to try and project economic growth areas, outside tech, I would say that BAM is right on target.  Energy, Urbanization, and Infrastructure would be my choices for future growth. 

Between BAM and BEP it is my largest position.

Jerome,

Uccmal wrote the above now almost two years ago. Al's line of thinking is quite similar to yours. I think of it as BAM mitigating/countering the complexity of the structure by providing guidance how to think about intrinsic value of BAM from a structural/methodical valuation point of view. Furthermore & personally, I think Al's post is still spot on.
« Last Edit: October 03, 2019, 04:22:52 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

John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
Re: BAM - Brookfield Asset Management Inc.
« Reply #1114 on: October 12, 2019, 02:20:34 PM »
Eric Sprague on SA [October 2nd 2019] : Brookfield Asset Management Is Firing On All Cylinders.

Eric Sprague's writings about Brookfield on SA has always had appeal to me. To me, this piece is on overall basis, but still based on deep and detailed knowledge of the whole system of companies. What he's doing here is to share his thinking about his personal adjustments to the intrinsic value of BAM as represented by BAM itself. We [the BAM investors here on CoBF] should really pursue this overall line of thinking and method, and discuss it actively with each other here.

- - - o 0 o - - -

"Firing on all cylinders" is a Viking thingy here on CoBF related BAC, btw! [ : - D ]

Instead of repeating myself here, I just choose to use the "Quote" option:

Here, yet another [to me] great piece from Eric Sprague [this time, about BEP] on SA :

Eric Sprague on SA [October 11th 2019] : Brookfield Renewable Carefully Examines Risk.

What Eric Sprague is covering in this piece is to me true. I may be wrong, but is there anything listed just about similar to BEP with regard to hydro power on this planet? - Personally, I don't know of any [-And - as always - I may be wrong &/or ignorant about that].
”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

Packer16

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3149
  • Go Riders Go! Go Pack Go!
Re: BAM - Brookfield Asset Management
« Reply #1115 on: October 12, 2019, 04:25:30 PM »
What he fails to mention is the unregulated power business is a poor business.  BEP has been a laggard & IMO will continue to be due to the poor economics of the IPP business.  Just look at the historical carnage here.  Even Brookfield cannot make a poor business generate good returns.  According to the IR material BIP and BEP have the same expected returns but historically, BIP has over delivered but BEP under delivered.  I would rather invest in better businesses, like those in BIP than in the more commodity ones in BEP.

Packer

John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
Re: BAM - Brookfield Asset Management
« Reply #1116 on: October 12, 2019, 04:46:45 PM »
What he fails to mention is the unregulated power business is a poor business. ...

Keith,

What are you referring to here? - I'm just trying to relate to your stance here.
”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

Packer16

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3149
  • Go Riders Go! Go Pack Go!
Re: BAM - Brookfield Asset Management
« Reply #1117 on: October 12, 2019, 07:07:15 PM »
A portion of BEPs revenues are based upon receiving market prices for the power it creates.  This is where the risk lies as the long-term price point for power is declining.  In addition for solar the terminal value could be very low as technology is making many cells obsolete.  Another observation is the claim the comps are making high single digit returns & BEP low teens rate of return in my mind says BEP has some high return projects that over time will approach market rates of return.

Packer
« Last Edit: October 12, 2019, 07:28:51 PM by Packer16 »

muscleman

  • Hero Member
  • *****
  • Posts: 3174
Re: BAM - Brookfield Asset Management
« Reply #1118 on: October 12, 2019, 09:25:43 PM »
A portion of BEPs revenues are based upon receiving market prices for the power it creates.  This is where the risk lies as the long-term price point for power is declining.  In addition for solar the terminal value could be very low as technology is making many cells obsolete.  Another observation is the claim the comps are making high single digit returns & BEP low teens rate of return in my mind says BEP has some high return projects that over time will approach market rates of return.

Packer

Do you think the same applies to TERP?
I am muslceman. I have more muscle than brain!

John Hjorth

  • Hero Member
  • *****
  • Posts: 2755
Re: BAM - Brookfield Asset Management
« Reply #1119 on: October 13, 2019, 01:52:16 AM »
Thanks, Keith,

I then certainly need to study that condition for BEP.

Edit :

It's described the BEP 2018 Annual Report, p. 34 & 35 in a separate section called "Contract Profile". The description appears quite transparent to me, so each can make up their own mind.

More long term, it's naturally a question about what will happen to the energy mix and energy prices the places where BEP operates, i.e. over the next decade or whatever time horizon is applied.
« Last Edit: October 13, 2019, 03:54:08 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