Author Topic: BAM - Brookfield Asset Management  (Read 541027 times)

nnayyar

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Re: BAM - Brookfield Asset Management
« Reply #80 on: June 04, 2013, 07:51:12 AM »
Tks for the link. Definitely sounds like they have an axe to grind. I went searching through their prospectus and finally found the reference to cash shortfall:

In particular, our
proposed distribution amounts are significantly greater than our
projected cash flow from operations based on dividend policies
currently in place at our operating entities and our projected
operating cash flow from our direct investments. Despite our
intention to use the proceeds of sales of certain of our direct
investments or borrowings to fund any shortfall in distributions, we
may not be able to do so on a consistent and sustainable basis.

Pg 13 of Prospectus:
http://www.brookfield.com/_Global/42/img/content/File/Investor%20Relations/Presentations/2013/BPY_Prospectus_E_March_15_2013.pdf

It sounds to me like they planned on using asset sales to cover some of the distribution? Is this normal?
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giofranchi

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Re: BAM - Brookfield Asset Management
« Reply #81 on: June 04, 2013, 08:05:56 AM »
Tks for the link. Definitely sounds like they have an axe to grind. I went searching through their prospectus and finally found the reference to cash shortfall:

In particular, our
proposed distribution amounts are significantly greater than our
projected cash flow from operations based on dividend policies
currently in place at our operating entities and our projected
operating cash flow from our direct investments. Despite our
intention to use the proceeds of sales of certain of our direct
investments or borrowings to fund any shortfall in distributions, we
may not be able to do so on a consistent and sustainable basis.

Pg 13 of Prospectus:
http://www.brookfield.com/_Global/42/img/content/File/Investor%20Relations/Presentations/2013/BPY_Prospectus_E_March_15_2013.pdf

It sounds to me like they planned on using asset sales to cover some of the distribution? Is this normal?

Well, one way BAM creates value for its shareholders follows:
Quote
As an investor and capital allocator, we strive to invest at attractive valuations, particularly in distressed situations that create opportunities for superior valuation gains and cash flow returns, or by monetizing assets at appropriate times to realize value;
In other words, they certainly strive to buy low, but also have no problem to sell, once valuations have recovered and the assets they own are no longer cheap.
Then, why not to distribute the proceeds? Of course, it is not a predictable source of cash, and thatís why they warned against the fact they
Quote
may not be able to do so on a consistent and sustainable basis.
But, when the cash is actually there, why not to use it?

giofranchi
« Last Edit: June 04, 2013, 08:08:01 AM by giofranchi »
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nnayyar

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Re: BAM - Brookfield Asset Management
« Reply #82 on: June 04, 2013, 12:37:57 PM »
Gio,

You are a large holder of BAM it seems? What are your thoughts/feelings on the move in Interest Rates and the effect on BAM, BPY? Feels very much like de-leveraging but more and more articles popping up on the 'expensiveness' of the group. Appreciate it!

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WhoIsWarren

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Re: BAM - Brookfield Asset Management
« Reply #83 on: June 04, 2013, 01:46:58 PM »

In other words, they certainly strive to buy low, but also have no problem to sell, once valuations have recovered and the assets they own are no longer cheap.

giofranchi

gio, you're right.

However, as they sell assets they'll have to pay capital gains taxes.  The company's own calculation of intrinsic value excludes net deferred income taxes (adjusted for non-controlling interests).  I can't find this number for 2012 but the 2011 number was $3.4 per share.

It's not a deal breaker, but I've always adjusted downwards this source of intrinsic value.

WhoIsWarren

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Re: BAM - Brookfield Asset Management
« Reply #84 on: June 04, 2013, 02:14:14 PM »
Gio,

You are a large holder of BAM it seems? What are your thoughts/feelings on the move in Interest Rates and the effect on BAM, BPY? Feels very much like de-leveraging but more and more articles popping up on the 'expensiveness' of the group. Appreciate it!

I'm not Gio, but here's my tuppence worth!

The company has spoken about rising interest rates on numerous occasions.  In essence, they say they're not buying assets on current yields and that their IFRS valuations are marked at discount rates a couple of percent higher.  In other words as rates rise, the first 200bps or so won't affect their IFRS valuations.

Then management goes on to say that they own real assets and as such rents / cash flows will eventually adjust to the higher yield environment, albeit with a lag.  So rising rates shouldn't affect the underlying intrinsic value, though of course the IFRS values will likely be hit.

This is a nice story and it's probably the most likely scenario.  However stagflation would present a pretty tough environment for BAM -- try increasing rents when the economy is shrinking.  And remember the company is twice geared.

The last thing to say is that no matter what the reality, the market will probably 'shoot first and ask questions later' as rates rise.  I don't think the stock is 'expensive' currently and I personally don't think that the underlying intrinsic value of the company will be significantly impaired by rising interest rates.  However, I'm hopeful that such an environment could present a nice opportunity for patient investors armed with good knowledge of the company.

Disclosure: long BAM
« Last Edit: June 05, 2013, 12:59:45 AM by WhoIsWarren »

giofranchi

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Re: BAM - Brookfield Asset Management
« Reply #85 on: June 04, 2013, 11:52:51 PM »
Well, here is one of the reason I love this board: by now I have come to the conclusion that, whenever I want to know something about an investment of mine, there is at least one person I know I must turn to: if I want to know something about Lancashire, twacowfca is undoubtedly the man! If I want to know something about Liberty Media, I always ask dcollon! (Also ItsAValueTrap has done great work on LMCA!). And as far as Brookfield Asset Management is concerned, whenever I want to know something about it, WhoIsWarren is the one I turn to! :)

And now I agree with him both on capital gains taxes and on rising interest rates.

Just a few words about those articles Ďpopping upí: I have read all of them, and I have found them unfounded and unconvincing. I think I understand what BAM is doing, and has been doing for decades with great success! Culture hasnít changed, goals havenít changed, competitive advantages havenít changed. Until something really changes for the worst, I see no reason to part ways with BAM, just because some articles have been published by short sellers.

giofranchi
« Last Edit: June 04, 2013, 11:55:32 PM by giofranchi »
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WhoIsWarren

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Re: BAM - Brookfield Asset Management
« Reply #86 on: June 05, 2013, 01:30:23 AM »
Well, here is one of the reason I love this board: by now I have come to the conclusion that, whenever I want to know something about an investment of mine, there is at least one person I know I must turn to: if I want to know something about Lancashire, twacowfca is undoubtedly the man! If I want to know something about Liberty Media, I always ask dcollon! (Also ItsAValueTrap has done great work on LMCA!). And as far as Brookfield Asset Management is concerned, whenever I want to know something about it, WhoIsWarren is the one I turn to! :)


Oh I think you're doing yourself a disservice Gio!  And don't be so sure I'm I'm your guy here.  'Course, I'll chip in where I can, but I am sure others on this board would put me to shame with their knowledge.

giofranchi

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Re: BAM - Brookfield Asset Management
« Reply #87 on: June 05, 2013, 03:43:08 AM »
Well, here is one of the reason I love this board: by now I have come to the conclusion that, whenever I want to know something about an investment of mine, there is at least one person I know I must turn to: if I want to know something about Lancashire, twacowfca is undoubtedly the man! If I want to know something about Liberty Media, I always ask dcollon! (Also ItsAValueTrap has done great work on LMCA!). And as far as Brookfield Asset Management is concerned, whenever I want to know something about it, WhoIsWarren is the one I turn to! :)


Oh I think you're doing yourself a disservice Gio!  And don't be so sure I'm I'm your guy here.  'Course, I'll chip in where I can, but I am sure others on this board would put me to shame with their knowledge.

Always too humble! :)

Cheers!

Gio
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giofranchi

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Re: BAM - Brookfield Asset Management
« Reply #88 on: June 06, 2013, 12:07:31 AM »
Brookfield - Real Assets Real Returns

giofranchi
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nnayyar

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Re: BAM - Brookfield Asset Management
« Reply #89 on: June 10, 2013, 12:16:07 PM »
Some insider purchasing of BPY. I find it interesting that BAM is a buyer of 750k since the idea was to reduce their holdings, perhaps a little of the value approach at work?

http://canadianinsider.com/node/7?ticker=BPY

"Because money won is twice as sweet as money earned."