Author Topic: BAM - Brookfield Asset Management  (Read 234829 times)

no_free_lunch

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Re: BAM - Brookfield Asset Management
« Reply #770 on: November 11, 2018, 10:40:40 AM »
The valuation models I have seen already include the fees, so the 'float' is already considered.


gokou3

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Re: BAM - Brookfield Asset Management
« Reply #771 on: November 11, 2018, 11:12:32 AM »
The 'float' to me generated by BAM's asset management arm (incentive fees and mgmt fee) is more attractive then Berkshire's 'insurance float' as it contains no liability risk on the back-end.  I realize this is a bit of a mute point given the differences in scale etc - but it is worth thinking about over the next 5yr - 10yr as a solid source of cash generation.

What do others think?

I am quite long in BAM (via PVF.UN) and its LPs, but I have always wondered if the reason for BAM's (and other asset managers like BX) low valuation is their tail risk of bad investment performance.  Specifically, we have seen in recent years of a multi-year performance slump of various asset managers, e.g. Legg Mason, Greenlight, Och-Ziff, etc. which followed by the collapse of their own stock prices and asset outflow.  BAM has been on fire for quite a long time but the market may have priced in the possiblity that they cannot adapt to a cliche black-swam event and things turn out bad for a couple of years.

That said, I think one difference between BAM and a typical mutual/hedge fund is that BAM mostly have control of its investees and have many more levers to pull.  As long as they don't put both feet into unfamiliar industries / geographies they should continue to do fine.

vince

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Re: BAM - Brookfield Asset Management
« Reply #772 on: November 11, 2018, 11:22:25 AM »
The 'float' to me generated by BAM's asset management arm (incentive fees and mgmt fee) is more attractive then Berkshire's 'insurance float' as it contains no liability risk on the back-end.  I realize this is a bit of a mute point given the differences in scale etc - but it is worth thinking about over the next 5yr - 10yr as a solid source of cash generation.

What do others think?

I dont understand the comparison to float?  Float is a non interest bearing liability (ideally anyway), whereas mgmt fees and incentive fees are earnings from operations.