Author Topic: BAM - Brookfield Asset Management  (Read 592027 times)

Saluki

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Re: BAM - Brookfield Asset Management
« Reply #650 on: September 26, 2018, 05:01:59 AM »
Behind every great company there is a great story. [I.e. for Investor AB, I have access to 100 years of financials on the company website.]

[If one has studied Berkshire, perhaps combined with the Buffett Partnership Letters, also perhaps combined with the information in "Snowball", one get a clear line of the whole evolution in Mr. Buffett's wealth].

I have been struggling now for months with "a missing link" about Mr. Flatt & Co's takeover of control of Brascan [now BAM] back then. Found out a bit about it last weekend - the whole thing still appears opaque to me.

I have posted about my findings in the PVF.UN topic here: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/pvf-partners-value-investments-inc/msg346184/#msg346184 .

FWIW, I have looked into this a while back. Could not untie the Gordian knot.
It seems that Mr. Cockwell was the mastermind behind the gradual grip of what eventually became BAM.
It also seems that Mr. Cockwell's edge was based, at least partly, on the mastery of complexity and labyrinthine accounting.
We all have to come to our own conclusions and it may end up a matter of trust but, for my humble part, I would say that there is likely nothing to find in terms of improper tansactions or dealings.

The historical part of Mr. Cockwell's rise is interesting as he was able to gradually gain control from two famous (in Canada anyways) Bronfman family descendants, using similar complex strategies and using his Pagurian vehicle which ate its parent Edper Group and which eventually became Brascan.

Mr. Cockwell firm structure map (which has always looked more or less like a pot of spaghetti dropped on the floor) has always included parallel intertwined funds and partnerships and some have used the nickname "the manipulator". I understand that he was a tough and clever tactician who is now quite involved in charity work which may have more than one meaning.

When 1139966 Ontario Limited became Edperpartners and then Partners Limited, Mr. Flatt is listed as one of the 38 investors which includes names of the Brascan family, including Mr. Timothy Price who is a director at Fairfax.

I assume that Mr. Flatt gradually increased his ownership over time and cannot figure out precisely the trajectory and the underlying financing. I would say that Mr. Flatt is more a strategist than a tactician, which IMO makes him a better CEO, and the BAM structure has been simplified to some degree over time.

https://web.archive.org/web/20060613022727/http://adamcorelli.com/html/edper.html
https://en.wikipedia.org/wiki/Edper_Investments
http://sirf-online.org/wp-content/uploads/2013/02/Partners_list-c-11.pdf



As part of my deep dive into Brookfield, I came across two books that you might find interesting. Corporate Catalyst by Tony Griffiths (also on Fairfax's board) worked on deals with Brascan and a related Bronfmann entity, Edper, and discusses them in his book. 

But the book that has a ton of information (I'm only halfway through it now) is called The Brass Ring.  It deals with the history of Brascan and the the other entities (Edper, Hees etc). There is a corporate entity chart in the back of the book which looks like a more complicated version the old setup of Berkshire in the Blue Chip Stamp days.  Cockwell is a key figure in building and transforming the group of entities (so is Trevor Eyton).  The Bronfmann's are portrayed as smart businessmen, but very hands off.  Their role is hiring the best managers they can and giving them room to run.
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable


John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #651 on: September 26, 2018, 10:38:31 AM »
Thanks a lot Cigarbutt & Saluki,

This is great! - I will look into those things. Saluki, I hope that you will consider to start two new topics about those two particular books separately, I do not recall to have seen topics there about them, but I may be wrong about that.
”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

cubsfan

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Re: BAM - Brookfield Asset Management
« Reply #652 on: September 26, 2018, 10:41:13 AM »
The first 2 presentations at the Capital Markets day were terrific.

Flatt and company have done a lot to simplify the presentation.  It has historically been tough
to get your arms around BAM, there is so much too it.  Today has been great.

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #653 on: September 26, 2018, 06:55:35 PM »
I have a lot of thoughts about today...

Does anyone recall the last time management gave these specific guidance metrics and valuation targets?? 

Look at BAM slide 108 ... targeting $118 BAM parent price in 2022.

the 20x multiple on the Asset Mgmt arm is rich IMHO... but even if its more like 15x, you are still talking about basically a double from here. 

You have recession risk overall with BAM - but with $35bn+ of dry powered, they can add to their Real Asset portfolio. 

I came away very impressed with todays presentation and will be adding to my position at these levels

villainx

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Re: BAM - Brookfield Asset Management
« Reply #654 on: September 26, 2018, 07:21:10 PM »
I have a lot of thoughts about today...

Does anyone recall the last time management gave these specific guidance metrics and valuation targets?? 

Look at BAM slide 108 ... targeting $118 BAM parent price in 2022.

Don't recall if it was every single investor day, but I've seen targets fairly regularly.

I remember a past q&a where someone asking Flatt how BAM performed based on their target (forget which particular one) from 5 years ago.  Flatt didn't have that particular information readily available.

The thing to keep in mind is that with the spinoffs, the deeper one goes back to the presentation archives, the harder it is to really see how, say, their price or IV target, has or hasn't been met.

chrispy

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Re: BAM - Brookfield Asset Management
« Reply #655 on: September 27, 2018, 03:13:47 AM »
Last year's or the year before had the same price target info.

On BAMs website there is a returns calculator. May this help?

racemize

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Re: BAM - Brookfield Asset Management
« Reply #656 on: September 27, 2018, 04:44:44 AM »
They've had these targets since at least 2012.  They usually hit them overall, but not necessarily exactly how they say they will.

vince

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Re: BAM - Brookfield Asset Management
« Reply #657 on: September 27, 2018, 07:08:50 AM »
I have a lot of thoughts about today...

Does anyone recall the last time management gave these specific guidance metrics and valuation targets?? 

Look at BAM slide 108 ... targeting $118 BAM parent price in 2022.

the 20x multiple on the Asset Mgmt arm is rich IMHO... but even if its more like 15x, you are still talking about basically a double from here. 

You have recession risk overall with BAM - but with $35bn+ of dry powered, they can add to their Real Asset portfolio. 

I came away very impressed with todays presentation and will be adding to my position at these levels

every year

StevieV

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Re: BAM - Brookfield Asset Management
« Reply #658 on: September 27, 2018, 07:17:38 AM »
I believe that BAM is using the same valuation metrics when they say: (1) the stock is worth $56.21 today; and (2) should be worth $118 in 5 years.

As I type, BAM is trading at close to $45.  So, given a similar valuation in 5 years, the projection would be about $94.  Basically, a little more than double, without a change in market multiple.  Of course, that's a projection.

walkie518

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Re: BAM - Brookfield Asset Management
« Reply #659 on: September 27, 2018, 07:28:01 AM »
My general impression of the meeting was that (1) BAM is firing on all cylinders and (2) they have training in being great sales people.

Sitting through the 8 hours did give me a much better feel for some of the subs and while they didn't advertise any limitations, there are certainly some cracks. 

It looks like BAM is putting a lot of money into BBU, which, if I understand correctly, intends to buy commodity-driven businesses and find ways to create stable cash flows from them and use a little leverage to juice returns.  My interpretation is that they are not shy to buy garbage at the right price, and in the case of Graftech, they turned a turd into gold.  How repeatable is the model?

On the one hand, Westinghouse appears like an interesting acquisition and plays to Brookfield's strengths.  Teekay looks like a business that might be more hands-off than Graftech was. 

The AT&T deal, on the other hand, doesn't look particularly appealing on a number of metrics.  Maybe there's something I'm missing on that one, but I don't think AT&T had a feel for what "scale" meant in the data center business when those properties were developed.

The financial engineering underpinning BAM is as deliberate as palpable. 

How BAM handled the GGP transaction with a new class of BPY as a US REIT in BPR shows they're willing to pull all the stops.  I'm curious to see how the reporting between the two will be different.

The clear benefit to owning BAM is that we can let some of the managers falter while the others do well and across the cycles BAM should continue to outperform. 

As for the targets Flatt outlined, they are substantial, but the market doesn't tend to appreciate guidance past a few months. 

If Brookfield generates as much cash as they claim they will over the next 5 years, the stock could certainly double.  If Brookfield starts to buy back shares using this cash as well as find new deals with good ROIC, I see no reason not to increase. 
« Last Edit: September 29, 2018, 11:42:24 AM by walkie518 »