Brookfield Corp (BN.TO)

Management has done a great job retaining talent. Close to $900B in assets under management. A behemoth. Trading attractively at 13x earnings.

On his watchlist. Downtrend broken, as is resistance. Could probably get to around $63. If he's right about market being overbought, could get a pullback, as all ships will fall with the tide. Likes the chart, rebound looks intact.

Complex business model that is hard to value. Better names to get exposure to in private equity space. Would not recommend to investors. 

The question was on his choice between BN and BAM. BN is Brookfield Corporation which is the old Brookfield Asset Management. BAM is the new Brookfield Asset Management. This is a result of re-structuring done in 2022. BAM has a better dividend, almost 4%, but not as much growth. BN has a small yield but more growth. It is leveraged to the economy and makes money when they sell something, so their income is lumpier than BAM. Since 2022 the total return on BAM is 28% and BN is 10%.

Likes the stock. Underperformed. BN and BAM are closely correlated. BAM just reported, increased dividend, a nice beat that some are saying merely due to taxes. He models outsized growth for 2024. Pretty attractive risk/reward. 22x, 17% distributable EPS growth. Buying at these levels will work.

A giant with many companies in many industries like real estate and private equity. The appeal of the latter is that it's less efficient than public markets, so it's easier to find mispricings. Also, given BN's scale and size, sellers approach them first before entering a competitive auction. Also, BN benefits from the secular trends of divesting from public into private markets. He owns several Brookfield stocks.

He feels strongly about the value of owning the parent, BN, rather than owning one of the subsidiary pieces.

Thinks it will be largest company on TSX in a few years. Mind-boggling amount of growth to come. Amount of money moving to alternatives is gigantic. 50% of asset base collects fees, and that base is increasing. Benefits from big themes like decarbonization and digital economy. Global. Cheap valuation. Lagging US peers due to worries over its 35% portfolio allocation to bad real estate, but most is running strong. Yield is 0.8%.

BN owns a percentage of BAM. BN is trading at a discount to NAV, widest discount in a long time, which is why you want to look at buying it here. Working at home has hurt BN's commercial properties. BN has raised lots of capital, great company, well run. BAM and BN are two of the best businesses you can own.

Core holding. Real estate has been an overhang. Company would argue that its holdings are high quality in good locations. Despite rise in interest rates, demand for alternative assets hasn't declined. Successful fundraising. Benefits from rates going lower. Excellent long-term hold for a growth company.

Many levers to pull to capitalize on value. Strong platform for growth.

Other private equity players have performed better. Hurt by real estate overhang. Valuation less than 11x distributable cashflow. Will always trade at a bit of a discount to sum of the parts, as it's the holding company. Free cashflow yield is north of 7%, exceptional value. Really good management. Good compounder at attractive price. He'd continue to buy.

It is a unique company and is expecting annualized growth in the 15 to 20% range. It can be somewhat volatile so buy on the dips. Its biggest asset is BAM which has $420 billion under management and is aiming for $1 trillion over the next five years and in fact is ahead of schedule in this effort. It is a good long term hold and still has room to run.

One of the world's foremost managers of long-duration assets, like private equity, renewable energy and utilities. They have assets around the world like the UK. They have size, scale and diverse funding. Are also a fine asset manager. Are capital-lite. Flows of funds into alternative assets are outstripping funds into stocks and bonds, even with these interest rates. Their shareholder returns are 15% compounded over the last 25 years. That means a $1 in 1998 is $31 today, including dividends.

Unfortunately, Brookfield is looking like the old Brascan empire, a plate of spaghetti, where they spin off all these entities, then buy them back and it's hard to keep track of how many there are. That said, BAM and BN-T are grossly undervalued. The market is overreacting to the impact of commercial real estate BN-T, in particular.