Brookfield Corp (BN.TO)

BAM was the parent before the spin-off. Now, BN is the parent that owns the various entities. So now the new BAM is a fee-related earnings business that pays a 4% dividend yield, It boils down to BAM having the yield vs. BN offering growth. BAM is for older investors seeking income, while BN is for younger, long-term investors.

Its two biggest overhangs are commercial real estate and interest rates. Built to take advantage of an environment like this. In prior downturns, took advantage of opportunities. Tons of excess capital. Well positioned. Don't throw in the towel. Very attractively valued, would buy today.

Shares are over 30% off peak, which is the 4th deepest pullback in 25 years of trading. Attractive multiple of 1.3x book, a 10-year low. Benefitting from a secular flow away from publicly traded market assets like stocks and bonds, and towards alternative assets such as the ones they own and manage. 

Advantage of global size and scale. Deep operating expertise. 15% compounded total shareholder return over 25 years. Any time you get a dip as deep and as sharp as this, buy it.

BAM, but he'd be wary of both right now because of the office side. BAM was spun out and it's largely private equity. Concerns him because it doesn't get revalued as frequently as publicly traded stocks. With interest rates having risen as much as they have, and potential economic weakness, there might be a risk to valuation. Public equity is a black box, so he's wary.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.

Lower interest rates are certainly more helpful to the Brookfield group. 
The company has a massive amount of capital to deploy. 
If valuations continue to fall, we would expect a lot of deals. 
Higher rates of course lower the potential return on deals, but if valuations are lower then this becomes a bit of a wash. 
The spin out should create value over time. Both companies have predicted fairly high growth rates, and BAM intends to pay out most cash flow in rising dividends. 
The value creation over the past 20 years has been nearly the best in Canada, and we would expect BN to survive this current market/economic scenario fairly well. 
The stock is going to bounce around, but it is not really a company we 'worry' about too much. It has proven itself time and time again.  
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Anything Brookfield: sell. It needs lots of liquidity, and liquidity is being drawn out of this market. The macro runs counter to Brookfield. He model $40.17, which is exactly where shares trades. Pays a small dividend; Brookfield needs to increase this.

The people running it are very bright and are great at creating shareholder value. They are masters at buying up and using debt. They had two defaults on holdings in California but they knew what they were doing and it was not a problem for them financially.

Very strong company.
Recent pullback has driven shares lower.
Excellent assets for the value oriented investor.
Potential upside around 26% could be expected.
Good long term investment. 
Strong balance sheet. 

In line with a lot of areas of the market, starting to see signs of stabilization. Chart shows a double-bottom taking hold. Most stocks saw weakness in December, a strong rally in January, and a pullback through all of February. Doesn't mind adding exposure here. If we break below the double-bottom lows, look to reduce exposure.

Real estate is going to be challenged. BN is primarily in the property business, which is still booming. Interest rates will be an issue, but it may take 5-10 years to be felt by the big players. Inflation and interest rates will change how people value properties. Work from home won't have as big an impact as believed. 

For growth. A lot to like in terms of maximizing value of assets. BN at the top of the pyramid has some unique arbitrage opportunities among the different assets. Strategic capital allocation benefits. More of a growth orientation, so it retains capital, with a yield of only 0.8%. Shareholder focused. He's quite positive on them.

It's become so complicated. He likes simple, transparent, and can I analyze it? In this environment where interest rates have moved so fast, he doesn't know what credit events are coming. He's standing back. It's a yellow flag right now. Instead, he owns BIP.UN and BEP.UN.

BN vs. BAM

He prefers holding the original Brookfield, whose discount to NAV is steeper than the asset management company. If you want exposure to infrastructure, utilities, etc. then he prefers BN to BAM.

It was downgraded today with investors worried about real estate in Brookfield Corp - BPY. It will probably clean it up and re-buy. It has great assets

Yield is around 1.5%, the lowest in the group. You have to evaluate each company separately. He owns BEP.UN and BIP.UN, as he finds those the most attractive long term. With those two, you tap into the Brookfield global, private equity expertise, with a focus on renewables and infrastructure. BN owns a lot of real estate. BAM is asset management. A complicated structure. You have to analyze the risk/reward to see what's right for you. He's not willing to take that much risk for the top of the house at such a low dividend. One thing is there's been more of a shift in office properties and vacancies post-Covid. Absent a significant change in interest rates or lessening of geopolitical issues, we're heading into a weakening economy. If you have a more positive view on real estate than he does, you may want to look at BN.