Brookfield Asset Management Inc (A)…

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Brookfield Asset Management Inc (A) (BAM.A.TO)

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DON'T BUY

He is net short. These stocks tend to be richly priced. It carries debt. He would not own it on the long side.

COMMENT

BAM vs ARE? He likes BAM and it is a core holding. They are involved in infrastructure with great cash flowing assets. In a low interest rate environment it will continue to do well. ARE is benefiting from taking on fixed pay contracts, which he views as being a little more risky. He would favour BAM.

DON'T BUY

vs. all Brookfield companies All the Brookfield companies are a difficult structure to understand. BAM has made some huge investments in real estate, which is a tough market. Brookfield holds office space in New York, which faces a tough decade. Brookfield as a whole is not for the feint of heart,

BUY

BAM vs. BIP For income, buy BIP; for capital appreciation, BAM. Both are well-run. BAM is the parent company and is one of the biggest asset managers in the world. BAM is solid and will be hunting for properties in this pullback; they are skilled investors. It's trading at a discount to NAV which means some downside protection It's a little difficult to understand all of BAM's moving parts and its reliance on various financing vehicles. (BPY is struggling, but will be a drag on BAM.) BIP and BAM will be fine long-term.

BUY

There is a lot more safety in the conglomerate than in the individual companies it holds. This is a good level at which to establish a long term position.

BUY

Work from home? Scotiabank released a report saying it is trading at a discount and is good value. Retail holdings is only about 6% of their revenues. He thinks the market is overly punishing them. Another issue is that they may be a little too exposed to Brazil. A good opportunity to buy a Canadian company with a global franchise. He owns it and would accumulate here.

BUY

He'd buy it today. Brookfield thrives in downturns, such as 2008, buying assets/properties when there's blood on the streets. Management was buying back a lot of shares in the March sell-off. BAM buys alternative (to fixed income) assets. So, with interest rates near zero, BAM is attractive. BAM's 5-year plan (from late 2019) projects a 20% annualized return in the next five years. Good to own for the long term.

BUY

Dynamite managers of long life assets. The various buckets are attractive as alternatives. If rates went higher, then some of their alternative assets could be challenged. It is a very stable business model. They have been able to raise enormous amounts of money to invest in long life assets and it is a rock solid center to a portfolio.

BUY

Long term hold? They own this one. At current prices levels in the mid-$40s it is a good buy. They have a long term view and their CEO has had a recessionary view of the economy for the past several quarters. She thinks they will use a market down turn as an opportunity. When they reported last week, they mentioned a 2018 mall acquisition with the intention to re-purpose it to multi-purpose use. In a world of low or negative interest rates, holding hard assets is the way to go. She would be a buyer here.

TOP PICK

One of the world's foremost managers of assets from infrastructure to renewables. IT has a worldwide footprint. It is big and getting bigger. They have deep expertise. It benefits from a shift towards reallocation by pensions towards hard assets. They are buying back shares as well allowing them to grow on a higher compounding rate going forward. Yield 1.39% (Analysts’ price target is $56.37)

HOLD

The preeminent asset manager globally. They have quite a bit of capital to put to work. He thinks highly of management. There will be a lot of volatility along the way. There are negative headlines that do get caught up but he would continue to hold it.

TOP PICK

He has owned this for a long time. It is the private equity investor in real assets and acts as the parent for the entire Brookfield family. Although a lower yield than their other public entities, they have access to their asset management business that is growing quickly. They have lots of excess capital and dry powder to take advantage of market opportunities. Yield 1.36% (Analysts’ price target is $56.37)

DON'T BUY

They have a lot of leverage in US commercial real estate, and also in worrying places like Latin America. There are a lot of risks to the Brookfield group of companies in a time when companies with heavy leverage will suffer. Look elsewhere.

HOLD

Everything with Brookfield always comes to the top. Fundamentally they are an asset management company. When assets go down, their fees go down, but there is a delay. This might have caused short interest to go up. He thinks they will grow assets well in this environment as they look for distressed assets. It's a high quality company and they are seasoned operators.

BUY ON WEAKNESS

This holding will probably benefit from lower interest rates and the likely need for asset management going forward. About 85% of their holdings are other Brookfield companies that will do well. He thinks it is good to buy on weakness.

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Brookfield Asset Management Inc (A) (BAM.A.TO)