Author Topic: BAM - Brookfield Asset Management  (Read 409399 times)

mjs111

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Re: BAM - Brookfield Asset Management
« Reply #1210 on: December 01, 2019, 12:18:19 PM »
Thanks, John and Jurgis!

BAM's book value increased by 3.1 times "overnight" sometime in 2010 upon adoption of IFRS 1, which required a bunch of assets recorded on the balance sheet at book value to be revalued at fair market value, so that explains some of it. Book value at the end of 2009 was $7.5 billion and if you look at 2010's annual report, 2009's end of year book value was re-recorded as $23.1 billion.  The equity figure I used for 2009 in my table is from 2010's annual report after it was revalued, not from the original 2009 report.


It looks like IFRS 9 (the current day standard) has similar breakdowns to US GAAP:

IFRS 9  has "fair value through profit or loss" (FVTP: recognized in income statement), "fair value through other comprehensive income" (FVTOCI: recognized in other comprehensive income), and "amortised cost" (recognized in the income statement).

The big difference I can see between GAAP "available for sale" and FVTOCI is that FVTOCI still bypasses the income statement.  If the asset in question is equity, it will bypass the income statement even upon sale.  Here's a snippet from BAM's 2018 annual report (page 129):

Financial assets classified as FVTOCI are initially recognized at their fair value and are subsequently measured at fair value at each reporting date. The cumulative gains or losses related to FVTOCI equity instruments are not reclassified to profit or loss on disposal, whereas the cumulative gains or losses on all other FVTOCI assets are reclassified to profit or loss on disposal, when there is a significant or prolonged decline in fair value or when the company acquires a controlling or significant interest in the underlying investment and commences equity accounting or consolidating the investment. The cumulative gains or losses on all FVTOCI liabilities are reclassified to profit or loss on disposal.


On page 128 of the 2018 annual report BAM lists what asset types are accounted for under what methods, though not by amount. So some of these assets would have had both realized and unrealized gains and losses that could have bypassed the income statement (and so aren't accounted for in the numerator in ROE, while making the denominator bigger).


It would appear that a decent chunk of BAM's assets (unknown to me at the moment) would have fair value re-measurements that bypass the income statement (even upon sale if they're equities).


Mike


« Last Edit: December 01, 2019, 01:22:23 PM by mjs111 »


Cigarbutt

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Re: BAM - Brookfield Asset Management
« Reply #1211 on: December 01, 2019, 02:53:50 PM »
^A helpful reference is the reconciliation at the transition date, page 69. Listed: impact of revaluations, accounting for NCI and deferred taxes; with a plan to "get it right" down the road.
https://bam.brookfield.com/~/media/Files/B/BrookField-BAM-IR-V2/quarterly-reports/2010/2010-q1-interim-report-final.pdf

racemize

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Re: BAM - Brookfield Asset Management
« Reply #1212 on: December 04, 2019, 06:33:42 AM »
Looks like Grant's interest rate observer had a bearish article on BPR/BPY last issue.  Anyone seen it?

Cigarbutt

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Re: BAM - Brookfield Asset Management
« Reply #1213 on: December 05, 2019, 07:06:19 PM »
^The typical themes are developed: supressed interest rates, reaching for yield behavior and the typical concerns conveyed in pages here.

Mr. Grant is not as optimistic about the retail landscape and finds BPY and its REIT offspring a bit stretched (vs Simon for instance). There are some questions about the homogeneity of the class-A malls status. I would say otherwise nothing outstandingly insightful.

There is a nice reminder about how BPY, when dealing with the valuation theme, does not spend much time on the 'fees' issue going to the parent while the ultimate consolidator does not seem to hesitate to put a 25 multiple on them.

Personal addition: A significant strength in BAM is the (almost permanent) long-term vision but there is an interesting quote in the car racing world: "To finish first, first you have to finish". That's what I understood as the message behind the title: Dividends at risk.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1214 on: December 16, 2019, 12:14:31 PM »
Goldman Sachs US Financial Services Conference 2019 [December 10th 2019]: Bruce Flatt and Howard Marks to Present at Goldman Sachs Financial Services Conference.

If you have a sincere interest in BAM, to me, you should really opt to spend 36 minutes of the rest of your life on this voice clip. The quality of the voice clip is simply awful, the content not. You could cut your allocation of time to it to two thirds by opting to listening to it at speed 1.5x [I tried 2.0x, that did not work satisfactory for me personally.]

Much more direct & candid expressions from Mr. Marks and Mr. Flatt than we are in general used to, when these gents talk to & with media outlets.
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Cigarbutt

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Re: BAM - Brookfield Asset Management
« Reply #1215 on: December 16, 2019, 04:48:48 PM »
Goldman Sachs US Financial Services Conference 2019 [December 10th 2019]: Bruce Flatt and Howard Marks to Present at Goldman Sachs Financial Services Conference.

If you have a sincere interest in BAM, to me, you should really opt to spend 36 minutes of the rest of your life on this voice clip. The quality of the voice clip is simply awful, the content not. You could cut your allocation of time to it to two thirds by opting to listening to it at speed 1.5x [I tried 2.0x, that did not work satisfactory for me personally.]

Much more direct & candid expressions from Mr. Marks and Mr. Flatt than we are in general used to, when these gents talk to & with media outlets.
Thanks! That was interesting.
There has been indeed a growing interest in alternative assets (institutional etc).
How do you qualify a situation where one can acquire "reasonable" assets and finance the purchase with 70% debt, with a rate of 1%? I don't remember the exact word but does it rhyme with the mortgage refinancing environment in a Nordic country? :) How can Mr. Buffett compete in such an environment when he (at least he says he does) calculates the prospective return on an investment with the assumption that it's 100% equity financed?

Never omitting to cover all possibilities, Mr. Marks, at the extreme end, is able to squeeze in the eventuality that 'we' may suffer from some kind of mass hysteria. With all due respect, Mr. Marks does not use the right terminology but maybe he simply wanted to avoid using the b word, which is fine if opportunism is your credo. True mass hysteria, technically, is extremely rare (read about the Melbourne airport 2005 'emergency' if interested). Contrary to the more generic bubble phenomena where 'experts' can always explain the crowd movement after the fact, it is usually impossible to explain what caused a true mass hysteria, even after it gets resolved.

There are days when I'd hope to be more intelligent and invest in BAM now but remain haunted by the dilemma formulated once by a Danish philosopher (Søren Kierkegaard): "Life is understood backwards, but must be lived forwards."

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1216 on: December 21, 2019, 05:50:50 AM »
Didnt tell us anything new .. I thought the GS questions stunk however.  Even still - this is my favorite security for the next decade handles down.

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1217 on: December 22, 2019, 04:36:12 PM »

sleepydragon

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Re: BAM - Brookfield Asset Management
« Reply #1218 on: December 22, 2019, 05:25:19 PM »
WSJ: Brookfield’s Bet on Malls Looks Riskier than Ever:

https://www.wsj.com/articles/brookfields-bet-on-malls-looks-riskier-than-ever-11577019601?mod=hp_lead_pos7

The WSJ article is not wrong in that the Malls are struggling. A month after the new premium BAM’s mall in Norwalk CT opened (It’s call SONO mall), another Mall in the adjacent town (Stamford Town center Mall) which had an Apple store and was where my wife bought her Rolex watch, announced the entire mall is on sale. I speculate one of the reasons could be that Apple and a couple high end stores are moving to the new Mall.

Gregmal

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Re: BAM - Brookfield Asset Management
« Reply #1219 on: December 22, 2019, 05:41:02 PM »
WSJ: Brookfield’s Bet on Malls Looks Riskier than Ever:

https://www.wsj.com/articles/brookfields-bet-on-malls-looks-riskier-than-ever-11577019601?mod=hp_lead_pos7

The WSJ article is not wrong in that the Malls are struggling. A month after the new premium BAM’s mall in Norwalk CT opened (It’s call SONO mall), another Mall in the adjacent town (Stamford Town center Mall) which had an Apple store and was where my wife bought her Rolex watch, announced the entire mall is on sale. I speculate one of the reasons could be that Apple and a couple high end stores are moving to the new Mall.

I think for 90% of people just saying that the mall space sucks, avoid it, is good enough. But inside the investment arena, its actually pretty interesting in certain places. So B/C malls basically have no value. That hasn't changed and IMO won't. But Ive noticed now that new development, and high end locations are actually somewhat healthy and even thriving. Ive noticed in several places B mall anchor tenants leaving to take up space as just another tenant in a new development. The key element from what Ive seen is being at the best location in your area. If you are, all the stores still want space. So I wouldn't necessarily be too concerned, as a Brookfield development is almost always shiny, highly promoted, and typically in decent areas. Ive seen the progression of the mall you are referring to; my son loves the aquarium next door...my wallet, not so much. But thats an area that sees traffic and will draw people.

Basically, it is my believe that the carnage in mall won't kill everything. It just changed the game. Companies used to be able to get away with multiple locations in close proximity. Now they seem to just want prime ones. But I dont think they will ever not want any. Location, location, location I guess lol. Real estate 101 currently doubling as "How to Survive the Mall Meltdown"