Brookfield Asset Management Inc (A)…

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

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Buy now or after they spin off their asset management business? The shares and valuation are getting attractive. They're trying to takeover a UK company. It won't make a huge difference either way (re: asset management spin-off), because they're investing heavily in other areas like renewables. BAM is a great wealth creator and very well-run. It's on his radar.

BUY

It is a great company but has sold off. It is splitting off the asset management side, separating it from the proprietary investment business. A pure play asset management business will be easier to analyze. The asset management business will pay out 90% of profit, making it a good income stock while the proprietary side is going for an annual 15% ROE.

BUY ON WEAKNESS

Core holding, though sometimes you want more or less exposure. In an economic slowdown, as he expects this year, you want to pare back. BAM.A is the best in class alternative assets manager in the country. Pullbacks provide an opportune chance to buy, put it away, and collect some income. Strong, sustainable, competitive advantages. Strong compounder over time.

BUY ON WEAKNESS

Average down in a recession? Yes. Not exactly non-cyclical. Proven over decades that it consistently grows earnings, funds from operations, dividends, and NAV. Well diversified geographically and by line of business. A quality compounder that you can buy on dips.

BUY

Wonderful business. Unique spot. Manages money for institutional clients for a higher yield. Well positioned. Valuation has come down along with the market. Likes the current entry point at 10-11x funds from operations. Good long-term hold.

BUY ON WEAKNESS

A core holding in the alternative asset management. Shares are down because the market is, but would buy now. Alternative assets enjoy secular growth, because sovereign wealth funds and pension funds are buying these, because bond rates have been low for a long time. So, a headwind could be rising interest rates. That said, the US 10-year rate is low historically even though it's been rising. Cash flows are protected from inflation, because they are hard assets in infrastructure and renewables. BAM has been successful in fundraising, so have a lot of capital. Volatile markets like now open an opportunity for BAM to buy cheap assets and sell mature ones at higher prices.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Not too much real estate exposure. Great likelihood of doing well in inflation. Has massive capital that can be deployed if acquisitions become cheaper, and has a more diversified overall asset base of businesses. Unlock Premium - Try 5i Free

TOP PICK

They reported last week. Likes Brookfield for being in the alternative asset space, because this is a growing space as more corporations and institutions invest more in this area. Such hard assets generate stable cash flow and shielded from inflation. Brookfield has a global presence and they are good at accessing capital with their track record. Their Oak Tree buy a few years ago was very beneficial by enlarging their client base and capital. They will spin off 25% of their asset management business. Share have pulled back with the market so it's good to enter this. (Analysts’ price target is $90.10)

BUY

A great long term investment with annualized compound returns over 20%. Expect a 20% growth rate each year for the next five years. It will spin off the asset management business and become two separate companies. One will be an income stock and the second will re-invest capital and aim for a 15% return over the long run. Both are good and he will own both.

BUY ON WEAKNESS

One of the world's premier asset managers. Lots of ways to create value. He'd never bet against the CEO. Headwind of rising rates, but volatility always creates a better entry point. Be very tactical in finding spots to buy. Review past investor days to track progress.

BUY

He's always admired it. CEO has done an amazing job managing. Always looks expensive, but always seems to surpass expectations. Its component companies have higher dividends. Right now, fair price to intrinsic value. A long-term investment.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The best option at these price levels for the current environment. Good for inflation concerns. Thinks there will be strong growth in 2022 and 2023 based on earnings and cash flow estimates. Unlock Premium - Try 5i Free

PAST TOP PICK

(A Top Pick Apr 15/21, Up 20%) Scaling in for new clients. Leading player in the growing alternative asset management area. Successful at fundraising. Likes all the verticals. Revenue generated from hard assets is inflation-protected. Purchase of Oaktree doubled client base, with potential for cross-selling. Very active in net-zero carbon transition.

TOP PICK

Unique business. Exposure to the rapidly growing asset management business. Thriving in the current environment, likely to thrive going forward. Good capital allocators, very reasonable valuation. Yield is 1.04%.

Unspecified

It is very well run and is one of the largest asset managers in the world. Has done everything right and is expanding internationally which creates many opportunities. Includes infrastructure, renewables and private credit funds in the U.S. The yield is relatively low so it might be a bit volatile in case of market turmoil. There is a possibility of spinning off the asset management business. Valuation is reasonable

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