Author Topic: BAM - Brookfield Asset Management  (Read 592152 times)

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1750 on: October 29, 2020, 12:13:05 PM »
Sounds nice.  However that would be a poor idea IMHO.  The only real transaction in size BAM should be doing is buying back shares at current levels. 


petec

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Re: BAM - Brookfield Asset Management
« Reply #1751 on: October 29, 2020, 01:58:47 PM »
While I’d love to see that, it’s all about what you get for what you give.
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wisowis

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Re: BAM - Brookfield Asset Management
« Reply #1752 on: October 29, 2020, 08:06:12 PM »
Interview with Bruce Flatt (October 29): https://www.youtube.com/watch?v=3PXxqCc24q4

formthirteen

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Re: BAM - Brookfield Asset Management
« Reply #1753 on: October 30, 2020, 01:23:33 AM »
Interview with Bruce Flatt (October 29): https://www.youtube.com/watch?v=3PXxqCc24q4

Thanks.

Interesting to hear Flatt share his thoughts on REITs:
https://www.youtube.com/watch?v=3PXxqCc24q4&feature=youtu.be&t=1503

He believes REITs are trading at such high discounts to TBV because the "narrative of the common media" is very negative about office and retail.

He also gives an example on what low interest rates might mean for REITs:
https://www.youtube.com/watch?v=3PXxqCc24q4&feature=youtu.be&t=1321

Higher cash flows and higher valuations...if you believe we're in a low-interest environment for a while.

Can someone tell me when the narrative on REITs will change? Thank you in advance.

StevieV

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Re: BAM - Brookfield Asset Management
« Reply #1754 on: October 31, 2020, 07:00:21 AM »
Interview with Bruce Flatt (October 29): https://www.youtube.com/watch?v=3PXxqCc24q4

Thanks.

Interesting to hear Flatt share his thoughts on REITs:
https://www.youtube.com/watch?v=3PXxqCc24q4&feature=youtu.be&t=1503

He believes REITs are trading at such high discounts to TBV because the "narrative of the common media" is very negative about office and retail.

He also gives an example on what low interest rates might mean for REITs:
https://www.youtube.com/watch?v=3PXxqCc24q4&feature=youtu.be&t=1321

Higher cash flows and higher valuations...if you believe we're in a low-interest environment for a while.

Can someone tell me when the narrative on REITs will change? Thank you in advance.

Thanks for the interviews.  I haven't listened to them yet, but will this weekend.  But, I don't see how only the narrative is very negative on office and retail.  The reality is negative - https://www.globest.com/2020/08/20/moodys-analytics-predicts-us-office-vacancy-rate-hitting-historic-highs-in-2021/?slreturn=20200931095751 .  BAM does a lot of things.  Is a good operator.  Etc.  So, a negative outlook on office and retail doesn't mean that BAM can's successfully navigate that space or succeed in other spaces, but I don't see how the overall outlook is anything other than negative or maybe really negative.

Viking

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Re: BAM - Brookfield Asset Management
« Reply #1755 on: October 31, 2020, 08:21:02 PM »
It looks to me like the key to valuing REITs (and all dividend/yield type stocks - utilities, pipelines, telco) is what is your view on what interest rates are going to do over the next 5 to 10 years.

Kind of like Buffett’s answer when asked how the stock market is valued: what is the yield on the 10 year US bond? And where is it likely to go in the future?

If the US/Europe/Japan/Canada/Australia see more disinflation or even mild deflation in the coming years and US 10 year bonds remain under 1% (possible even go negative) every investor in the world will be looking for return. Right now in Canada you can buy a basket of utilities/pipelines/telco/banks etc that pays you a blended dividend yield of about 5 to 5.5% (depending on your sector weightings). This basket of stocks also are trading down 15-20% this year (they are not expensive). The basket should also see mid single digit growth in earnings (and dividends) per year over the coming decade. They are well financed (not too much debt) and are, for the most part, well run.

Here is the key: the focus right now is still on getting through the pandemic. (I think there is also an election soon in the US so that might be distracting some people). In the next 12-24 months as the reality sinks in that bond yields will be staying crazy low for the next 10 years investors (the professional money) are going to start to panic. Money will start to shift into any sector with yield: stocks, real estate, private equity. For stocks REITs are one asset class that will benefit. It would not surprise me to see PE multiples go to 30 for blue chip dividend stocks. There will be no alternative.

I think this is the future that Flatt sees. Covid/recession is just something to throw people off what is really going on under the hood (the secular trend which is disinflation/mild deflation).
« Last Edit: October 31, 2020, 08:35:43 PM by Viking »

clutch

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Re: BAM - Brookfield Asset Management
« Reply #1756 on: October 31, 2020, 09:03:43 PM »
It looks to me like the key to valuing REITs (and all dividend/yield type stocks - utilities, pipelines, telco) is what is your view on what interest rates are going to do over the next 5 to 10 years.

Kind of like Buffett’s answer when asked how the stock market is valued: what is the yield on the 10 year US bond? And where is it likely to go in the future?

If the US/Europe/Japan/Canada/Australia see more disinflation or even mild deflation in the coming years and US 10 year bonds remain under 1% (possible even go negative) every investor in the world will be looking for return. Right now in Canada you can buy a basket of utilities/pipelines/telco/banks etc that pays you a blended dividend yield of about 5 to 5.5% (depending on your sector weightings). This basket of stocks also are trading down 15-20% this year (they are not expensive). The basket should also see mid single digit growth in earnings (and dividends) per year over the coming decade. They are well financed (not too much debt) and are, for the most part, well run.

Here is the key: the focus right now is still on getting through the pandemic. (I think there is also an election soon in the US so that might be distracting some people). In the next 12-24 months as the reality sinks in that bond yields will be staying crazy low for the next 10 years investors (the professional money) are going to start to panic. Money will start to shift into any sector with yield: stocks, real estate, private equity. For stocks REITs are one asset class that will benefit. It would not surprise me to see PE multiples go to 30 for blue chip dividend stocks. There will be no alternative.

I think this is the future that Flatt sees. Covid/recession is just something to throw people off what is really going on under the hood (the secular trend which is disinflation/mild deflation).

Viking, your analysis actually seems spot on, but how come the mainstream investors do not see this? It's almost so obvious that blue chip dividend stocks should be trading at a premium... why is the market so inefficient now?

Gregmal

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Re: BAM - Brookfield Asset Management
« Reply #1757 on: October 31, 2020, 09:05:16 PM »
It looks to me like the key to valuing REITs (and all dividend/yield type stocks - utilities, pipelines, telco) is what is your view on what interest rates are going to do over the next 5 to 10 years.

Kind of like Buffett’s answer when asked how the stock market is valued: what is the yield on the 10 year US bond? And where is it likely to go in the future?

If the US/Europe/Japan/Canada/Australia see more disinflation or even mild deflation in the coming years and US 10 year bonds remain under 1% (possible even go negative) every investor in the world will be looking for return. Right now in Canada you can buy a basket of utilities/pipelines/telco/banks etc that pays you a blended dividend yield of about 5 to 5.5% (depending on your sector weightings). This basket of stocks also are trading down 15-20% this year (they are not expensive). The basket should also see mid single digit growth in earnings (and dividends) per year over the coming decade. They are well financed (not too much debt) and are, for the most part, well run.

Here is the key: the focus right now is still on getting through the pandemic. (I think there is also an election soon in the US so that might be distracting some people). In the next 12-24 months as the reality sinks in that bond yields will be staying crazy low for the next 10 years investors (the professional money) are going to start to panic. Money will start to shift into any sector with yield: stocks, real estate, private equity. For stocks REITs are one asset class that will benefit. It would not surprise me to see PE multiples go to 30 for blue chip dividend stocks. There will be no alternative.

I think this is the future that Flatt sees. Covid/recession is just something to throw people off what is really going on under the hood (the secular trend which is disinflation/mild deflation).

Yup. The concern I have with energy is that its going to be a continuous target, politically. Banks are tough too, and still way to susceptible to disruption. But RE and Utilities...are going to do very well. Covid is just a short term distraction for many. It will all come into focus soon enough. The great ones see things that are obvious before they are obvious, as I believe Flatt has done here.

petec

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Re: BAM - Brookfield Asset Management
« Reply #1758 on: October 31, 2020, 10:23:11 PM »
I think you need to distinguish between inflation and rates.

Low rates are obviously great: more cash flow to equity as you refinance lower, and those cash flows get capitalized at (hitherto) silly multiples. And for BAM a third win, as they hoover up assets looking for yield.

Disinflation is not so good, since the assets are (in theory at least, and sometimes in regulation) inflation linked.

Deflation could be an outright disaster, given the amount of debt.

The ideal situation here is actually financial repression - ie inflation and low rates. That might be the desired outcome politically to inflate away debt.
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Viking

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Re: BAM - Brookfield Asset Management
« Reply #1759 on: October 31, 2020, 10:45:16 PM »
I think you need to distinguish between inflation and rates.

Low rates are obviously great: more cash flow to equity as you refinance lower, and those cash flows get capitalized at (hitherto) silly multiples. And for BAM a third win, as they hoover up assets looking for yield.

Disinflation is not so good, since the assets are (in theory at least, and sometimes in regulation) inflation linked.

Deflation could be an outright disaster, given the amount of debt.

The ideal situation here is actually financial repression - ie inflation and low rates. That might be the desired outcome politically to inflate away debt.

You explain very succinctly why central banks are so worried right now. Mild deflation + debt bubble will be a disaster (hello Great Depression). Powell is BEGGING for more fiscal stimulus; he is VERY worried about something.

Yes, mild inflation is nirvana for central banks and governments. Mild deflation (1-2% falling prices) with a debt bubble is catastrophic. With 2% inflation the real value of debt falls over time. With 2% deflation the real value of debt  increases over time.
« Last Edit: October 31, 2020, 10:49:12 PM by Viking »