Is anyone else amazed by the speed, and volume with which these guys are doing deals?
Not really amazed, ValueMaven,
-more like satisfied. [ : - ) ] But yes, BAM & subs seem to have had great business momentum the last few years. They are now harvesting the fruits of developing a business model during the last 15 years or so, that appears to work. They have invested heavily in building the contact & client network, regional offices etc., which is the real asset here, and the economic value of that is not booked on the balance sheet anywhere. The number of clients is now 600+ and growing, not so long ago is was about 450 [both numbers mentioned by Mr. Flatt somewhere].
I still occasionally go back to tiddman's post from January 2018 to reread it - it's just excellent :
I've had large positions in both Berkshire and Brookfield for about 15 years. One of the things I like about having both investments is that they are in many ways completely different, and yet each company is widely diversified and based on cash flow returns.
Berkshire is almost entirely in the US, has long term holdings, organic growth, makes little use of debt or financing, and Buffett at the helm. Brookfield is very international in multiple countries, is more transactional, makes heavy use of debt and financing, and the management team is about 10-15 people who are all considerably younger than Buffett and Munger.
I really don't think that Berkshire would have any interest in acquiring Brookfield or any of its subsidiaries, and it's interesting to me that even though both of them have broad reach, they almost never encounter one another or partner on any investments. They just have totally different approaches. I think that Buffett and the Berkshire execs would be put off by Brookfield's use of debt and financing, and while Brookfield in some ways models its business after Berkshire, it could not do what it does without debt financing. The secret to Brookfield's success is access to third party capital, but Berkshire has always generated its own capital via insurance companies.
I think both companies have a bright future but over the next 20 years I think that Brookfield probably has more opportunities for growth and a broader reach. BAM has a market cap of only $43B, all of the Brookfield subs combined add up to around $70B. Berkshire is nearly 10x as large with a market cap of $500B and its returns are still driven primarily by one person. Brookfield is driven by a team of younger execs who each have their own opportunities for growth. In fact I think Berkshire could learn something from Brookfield's culture and management style.
