Author Topic: BAM - Brookfield Asset Management  (Read 509861 times)

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #330 on: December 26, 2017, 11:35:10 AM »
IWG Plc Announcement [December 24, 2017].

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Thank you for sharing, Jerry, and a belated welcome to CoBF!
« Last Edit: December 26, 2017, 11:37:16 AM by John Hjorth »
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cmlber

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Re: BAM - Brookfield Asset Management
« Reply #331 on: December 28, 2017, 07:50:27 AM »
No position in BAM, I just follow because I think it is interesting.

I disagree with the view that inflation will increase real estate prices.  It may, but I think it won't.  Particularly in markets that have a lot of leverage.

Take NYC and its ~4% cap rates.  What happens in inflation?  First interest rates go up.  That 4% cap rate looks terrible if inflation is north of 3%.  Second, all real estate needs to be financed and interest rates will be higher.  Both of those point to higher cap rates.  Finally, the cost to repair and manage will go up.  That too should mean higher cap rates and lower prices.

Then there is the secondary effects.  There is so much debt with real estate as collateral.  If we have real estate prices dropping, the security drops.  I think this will make lenders more reluctant to make real estate backed loans.

I think in theory inflation increases real estate prices, but that is only if real estate was bought for cash.  But you add in the leverage, I think the dynamic is the opposite.

If you went back to the 80s, real estate did not do well.  The ramp up in global real estate prices has come in the last 10 to 15 years in a period of low inflation, which leads to lower interest rates, and the opposite of what I describe above.

I agree. I think higher inflation will be a disaster for hard asset managers like BAM. Cap rate will go up, which means that the assets that they are managing for their clients will go down in value. Capital will exit and incentive fees will go down. Eventually this will stabilize again and maybe lead to a boom in hard assets, but not before a major adjustment.  I also expect a lot of bankrupticies in the financial sector due to loans going bad and asset/liability mismatches.

Aren't you guys forgetting about growth?  A diverse portfolio of real assets should grow by real GDP + inflation, i.e. by nominal GDP.

Theoretically, intrinsic value should be earnings / (cap rate - growth rate).  If inflation goes from 2% to 4%, the cap rate should go up by 2% and the growth rate should go up by 2% and the two should cancel out.  If you're of the view that cap rates will go up because real interest rates will go up (without a corresponding increase in real GDP growth), that's a different story. 

cubsfan

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Re: BAM - Brookfield Asset Management
« Reply #332 on: December 28, 2017, 08:17:11 AM »
If you own assets with monopoly/oligopoly-like characteristics - you have pricing power and should be able
to raise prices to keep pace with inflation or in excess of inflation. Pipelines, transmission lines, hydro dams,
cell towers,  that can't be easily duplicated in geographic regions - or even the best located real estate.

This comprises many of BAM's assets.

John Hjorth

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« Last Edit: December 28, 2017, 09:00:59 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

sleepydragon

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Re: BAM - Brookfield Asset Management
« Reply #334 on: January 04, 2018, 07:01:40 AM »
My brokerage account logged an "Exchange" transaction, swiping all my TRISURA GROUP shares into "CONTRA TRINTY VALLEY XPN PARENT"

Does anyone know what this is about?
Thanks!

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #335 on: January 04, 2018, 07:23:40 AM »
sleepydragon,

A 1 for 10 share consolidation, followed by a 10 for 1 share split is taking place in Trisura, to weed out all shareholders with less than 10 shares, if I have understood things correctly.

It must be covered on the Trisura website, I think.
« Last Edit: January 05, 2018, 07:40:04 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

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Re: BAM - Brookfield Asset Management
« Reply #336 on: January 04, 2018, 08:10:15 AM »
I'm sorry for double posting.

It seems that Brookfield just did it again: BBP.UN to aquire Westinghouse Electric Company.

Seems like a deal similar to the Terraform deal after SUNE filed for bankruptcy. And a lot of capital send to work for the BAM system and BAM clients/BAM funds, most likely.

Subject to Bankruptcy Court approval, expected to close in third quarter of 2018.

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BAM certainly has a lot of appeal to me. Let BAM do the value investing, and I can continue to behave like Beetle Bailey.
”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

racemize

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Re: BAM - Brookfield Asset Management
« Reply #337 on: January 04, 2018, 08:27:06 AM »
I'm sorry for double posting.

It seems that Brookfield just did it again: BBP.UN to aquire Westinghouse Electric Company.

Seems like a deal similar to the Terraform deal after SUNE filed for bankruptcy. And a lot of capital send to work for the BAM system and BAM clients/BAM funds, most likely.

Subject to Bankruptcy Court approval, expected to close in third quarter of 2018.

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BAM certainly has a lot of appeal to me. Let BAM do the value investing, and I can continue to behave like Beetle Bailey.

As long as they didn't take on those &*#%$^& CBI nuclear projects.  I'm assuming they wouldn't do something like that.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #338 on: January 04, 2018, 08:47:37 AM »
... As long as they didn't take on those &*#%$^& CBI nuclear projects.  I'm assuming they wouldn't do something like that.

I almost spluttered coffee into the keyboard! Yes, you are right here, Joel. That's actually important - very!, - and not covered - at all - by the news release.
« Last Edit: January 04, 2018, 08:49:09 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

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Re: BAM - Brookfield Asset Management
« Reply #339 on: January 04, 2018, 09:16:35 AM »
I've found this Toshiba news announcement, dated December 14, 2017, that at least partly supports Joel's assumption. [I haven't been following the CBI topic here on CoBF closely, so I'm not fully and in all details informed.]
”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