Brookfield Spin-off! I OWN IT! BAM Stock Analysis! Buy More?
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- เผยแพร่เมื่อ 5 ต.ค. 2024
- Brookfield Corp. (BN stock) has crushed the market indices over the last few decades, growing at nearly 19% annualized. They recently announced a SPIN OFF of 25% of their asset management business, Brookfield Asset Management (BAM Stock). In this video I discuss BAM's valuation and my thoughts on future potential returns. I own both BN and BAM stock at the time of this video publication.
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This video is purely for informational and educational purposes. This is NOT investment advice. You should not treat any opinion expressed by Daniel or Unrivaled Investing as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of opinion. Daniel and Unrivaled Investing are not under any obligation to update or correct any information provided on this website or in these videos. Daniel and Unrivaled Investing’s statements and opinions are subject to change without notice.
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At the time of this video publication I owned stock in both Brookfield (BN) and Brookfield Asset Management (BAM).
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Following the corporation and now the asset manager very closely. Initially I wanted to hold mostly the asset manager but now have realize the corporation is a much better value. When you get out the 75% ownership that the corporation has of the asset manager you're paying about $10 a share for all of Brookfield Corporation less than manager. Treat the corporation as a holding company where you still get all the upside of the asset manager
More valuation videos please. Thank you! Value investing community appreciate you
For sure! Thanks for the kind feedback. For folks that want more clarity on valuing businesses, I recently launched a course dedicated to that very subject at www.unrivaledinvesting.com
Very interesting break down, thank you for all your videos! 👍
As you said it is a complex business, too complicated for me.
Love it! Everyone needs to define their own journey or as Buffett might say: stay within their circle of competence. Good for you for knowing yours!
Very nice work. Thanks. I would be interested in a valuation of $BN as they look cheap. If you assume a $BAM price of ~$29, $BN looks like ~$12 net of it’s $BAM stake. That is for everything other than asset management (although substantial debt).
Thanks for the kind feedback! Plan on discussing BN vs. BAM with my subscribers at www.unrivaledinvseting.com in an upcoming letter!
I'm a holder as well. Looking to add. Thanks for the analysis
Thanks! I'm curious as to your view on risks. Do you see any short term/medium term risks to the business model as JPow kicks the crap out of assets? Or put differently: Do higher rates mess with their model as assets decline in value and management fee decreases proportionally?
Very high multiple for asset management business in my opinion. Would like to see analysis on bn. Thanks for the info
Bn Mkt Cap is roughly 1/3 of BAM as of today, I understand the higher risks of BN in regards to debt. it seems strange to Value 25% of one business segment at 3x the value of the entire business. Alot of downside potential for BAM stock IMO. BN trading at roughly 3x fcf while BAM at over 20x fcf.. what's your thoughts?
1. I think that’s point of spin-off they thought this business should get higher p/e
2.very stable cash flow with fee based that is very sticky along with no debt and very little capex
Those would be my reasons for your question
QUESTION: Did you mean you're bullish/buying $BAM or $BN (or both) after the recent split? And is there one you're perhaps MORE bullish on of the two? Thank you for your analysis!
That is a GREAT question. I just dived into it and the nuances between the two (BN vs. BAM) in my exclusive letter last week at www.unrivaledinvesting.com
The fact that all you guys are talking about it means it is overvalued..
Hi, love your content..
I would love another BAM video after Q1 report, it's still hard busniss to understand but according my calculations (avg of amangement 1B exp. and actual yoy growth and 20 price to destributed earnings) it's around 8% +4% div annual returns.. would love to see your thoughts
Great question! Just wrote about it in my weekly letter!
Hi! Thanks for the video. I came across BAM when learning about the Cove Point LNG terminal. Seems like a really important long term asset within the North American Energy market, but not sure how sensible it is to base an investment off of one port?
why is their "Changes in working capital" negative? How does it affect free cash flow on long term?
Great video. Complicated business to understand, especially with the spin off. Saw this in Mohnish Pabrai’s fund. Looks like an interesting buy
First of all thank you for the video. I'm investing since 4 month into BAM to do DCA, but now I'm confused in which one I should invest in the future. Is it wrong to sell BAM and move on with BN ?
Great question. Every investor has different priorities re BAM vs. BN or both. Will discuss my thoughts in greater detail in an upcoming letter to subscribers at www.unrivaledinvesting.com
Can someone explain to me why when I look up their 10year ROA, ROE, ROIC, I just get numbers in the 1-2% and yet every video I watch on this company says, look we have an annual 10%+ return. Maybe the stock has gone up, but is the company actually putting those numbers out? Because I can't seem to find anything that can confirm it. I just see that their debt is ballooing and everything seems overvalued. Yet, as usual we have all of youtube banning together to claim this is the deal of the century
Daniel great video, you have assumed a PE of 20 as asset management companies should have a kind of premium, however, comparing with other asset management companies like T Row Price and Blackrock, they have an historical PE between 11-18. Can you explain more why BAM should have a higher PE than them?
It's generally the rate of growth. Faster growing companies command a higher PE ratio. I do disagree with the low case, it could be much worse than 12% annual growth over a few years
@@christopherwinnie9545 indeed the PE is higher when you have a higher growth, but no only, you also have to consider the ROIC & ROE as well as the MOAT, and T Row and BlackRock are one of the bigger players in the market, and they are currently trading at 14&19 PE respectively. And if you see TROW rate of growth is more than 10% annually, with exception of this year, then I don't know what makes BAM more attractive than TROW
@@davidariasmaestre715 BAM is relatively newer. Smaller funds grow faster
BAM was trading at 43$ last Friday and yesterday dropped to 30$. The PnL of my bank account showed a -25% loss, the ticker changed to BN and no additional shares added and I couldn't trade. Today still in red, the buying price hasn't been adjusted, no adjustments whatsoever. Have I just lost one fourth of my investment then? Sorry I'm not an expert so I'm not sure, thanks
You should also get shares (roughly 25% in number) of new BAM shares as well as the original BN shares you hold
@@unrivaled thank you so much for your reply 🙏 I haven't gotten the new BAM shares yet, I hope to get them soon. I just got a bit stressed by this, but now you reassured me 😊
@@unrivaled Thank you Daniel, this was the information I was looking. I was just as confused about what I was seeing in my account as OP
I'm in the same boat as you. Wasn't really paying attention and woke up Monday BAM was gone and have BN at at 25% loss. Still no new shares yet. Kind of searching the internet as to what's going on but I haven't found anything yet.
@@windowlicker6996 yeah me too, still no (new) BAM shares added and I can't find info on when I should get them 😒 have you found additional info on this?
Brookfield public entities are a good core long term investment hold. However, BN’s stock price is volatile and can provide good opportunities to buy / relative to BN’s value.
BN currently trades at a large discount to NAV ~30%. Therefore, BN is exceptionally attractive now and relative to BAM.
Brookfield has been around for more than 100 years & Bruce has been CEO for ~25 yrs. Their is high inside ownership and no integrity issues as implied.
My bottom line is that I don't trust a company that runs business from Cayman Islands. Also any big assets business like Brookfield cannot be value to me, surprised to see this in this channel. it's much better to have these big guys through an index ETF if you really want them. Don't hold your breath on Brookfield.
aftr the split I can trade or buy anymore my broker just don`t get that through:(
I own Blackstone but probably should own both.
Careful with Blackstone right now...something going on...limiting withdrawals. I would hedge the position. Good luck.
@@loveall1992 I’m a long term investor but thanks.
how do I ensure i get BN.TO and not US BN? I do not want to hold American stocks in my TFSA.
Curious if any of your analysis changed since you made this video
Should i buy bam or bn?
Thanks for this valuable video!
Glad it was helpful!
I'm confused why you think new BAM earns exactly 25% of the original. It could be any percentage.
Pretty sure Bm owns the other 75% so it’s directly correlated
They only spun off 25% of the asset management business, therefore they reviewed 25% of fees
So BN is still holding 75% of BAM.
So I think BN is BAM + the reinsurance business right?
Plus their investments. Will discuss BN more in an upcoming unrivaledinvesting.com subscriber letter.
@@unrivaled thought their investments in BIP, BEP, BBU, BPG will get under BAM
To be clear, What is now BN is still the parent company?
Exactly right. This video was about BAM (an exceptional business that I own),and I'm going to do a follow up on BN for my subscribers at www.unrivaledinvesting.com
Talking about crushing market & spawning company, I suggest to have a look at Constellation Software.
A little too expensive for my taste!
Prefer BN as compared with BAM.
Performance fee will start to become material enough only after 5 years.
Very possible!
Thank you I love you
Glad it helped! Thank you for the kind feedback!
There are so many dividend aristocrats out there with higher yields & higher return potentials, what’s the logic buying this Canadian crap?
Like what?
please consider the value stock I found called 360Digitech. You will be very surprised when you see it.