I can definitely respect the safety aspect as having BN is like having an ETF of Brookfield when you own the individual parts it's more risky and the one you pick may underperform other Brookfield businesses. One thing I can see as a benefit to holding BAM is purely the yield that you would make if you need cash flow now it could be the right choice and still stay invested in Brookfield. Good point about bringing up the Property Partners spinoff that did not go over so well I may just consolidate into BN.
Hi. I'm not invested in Brookfield family now, but I'm studying some documents for now. I saw that BAM has the better convertion of revenues in earnings, almost 50% rate. To me seems reasonable that BAM deserves a premium, so I think I will prefer it to the Corporation ;)
Hi Francesco, I think we should wait for at least 3 consecutive earnings reports after spin off to understand what are the margins exactly in asset manager amd corporation. The old financial data is for the combined business (before spin off) which can be misleading in my opinion. Even if BAM reports great numbers, BN still benefit from those numbers as they own 75% of BAM.
BAM manages all the assets under the Brookfield umbrella. So the majority of the assets they manage part of Brookfield infrastructure or renewable and so on. This means that it wouldn't be as cyclical as like regular asset managers (stock manager). BAM is an alternative asset manager. I do believe from my research that BAM will have the most stable revenue since it just manages assets of Brookfield without regards to profitability of all the Brookfield partners.
Thanks for your input. It's a complex business but my understanding from reading their documents is that corporation manages capital allocation at highest level (receiving and re-allocating capital to asset manager, operating businesses, insurance, and incubating new businesses) while asset manager manages the current/future investments and find undervalued assets. Still, I love to see BAM as a powerhouse and cashflow machine as 75% of their profits will come back to BN for re-allocation!
BN debt is a nightmare imo, 23 years to pay of there debt..while Bam requires 7 years.. no one seems to like to talk about the debt these companies have.. but if you think High debt is "less risky" cause they have stable cash flow, okey but the cash will go to pay down debt not to investors pockets.. idk bam looks okey with there return on cash but i feel like we cant predict how these two will do untill mangement can show that the plan they setup will fall into place.
BN owns 75% of BAM so whatever BAM does right, benefits BN shareholders too. These spin offs are just the management strategies to maximize value for shareholders. In 20 years, you'll probably have another 5-10 ticker symbols from Brookfield businesses in your portfolio if you just hold the mothership. It's less risky because they own majority stake in their independemt divisions which means they have financial flexibility.
I’m going the opposite way to you. I like BAM better. BAM has no debt and will be a very capital light business. It doesn’t need to tie up capital in buildings, infrastructure, etc. It will be the profit engine of BN. They know it will trade at a premium when it grows at the 15-20% per year they are forecasting and it’s all falling to the bottom line. That’s why they retained 75% of it. BAMs the jewel of the corporation.
Thank you for sharing! You are probably right about profits and I believe both BN and BAM will make money and generate good returns for investors over long term. However, I still think BN is a safer bet. I'm not so sure about the growth rates, the 15-20% was for the old BAM and it is not clear how much of growth will come from main corporation asset allocation and how much will come from BAM. I guess we have to wait and see for a few quarters.
@Investing with Yashar I was also skeptical about the growth. But they repeated it so many times in their investor presentation last year... I think there are pre-commited periodic amount coming in (pensionfund contributions and the like) that make them so confident.
How could asset management revenue be more cyclical than the corporation that invests in the funds? If the management fees are tied to the performance of the infrastructure funds. Returns of the funds are more volatile than management fees. BN should loose more than BAM in down markets.
4% return on cash 4% return on equity share delution unstable EPS unstable cash flow 48% payed in dividend 60% dept to capital Most of its cash flow will go to debt. BaM looks more promising but unstable.
Brookfield is a complex business with many hard assets and depreciation so cashflow or eps cannot be used to valuate their financials properly. You need to look at AFFO for these parts of their business. Their corporate debt is also was less than 20% I believe the rest are non-recourse debts based on assets. Overall, you cannot value BN using conventional metrics as they operate completely different.
Believe it or not, the job of the CEO and management team in every profitable and well-run company is to make money for investors by maximizing the profits and revenue. Privatization is not profitable for shareholders if the shares are undervalued.
@@Investing_Yashar - that's there overall objective - to exit the overall public market - as undervalued as possible ! I am not naieve - it's been done many times in the past ...
I can definitely respect the safety aspect as having BN is like having an ETF of Brookfield when you own the individual parts it's more risky and the one you pick may underperform other Brookfield businesses. One thing I can see as a benefit to holding BAM is purely the yield that you would make if you need cash flow now it could be the right choice and still stay invested in Brookfield. Good point about bringing up the Property Partners spinoff that did not go over so well I may just consolidate into BN.
Thanks for your input! I agree with the yield play on BAM which may work for some investors. Cheers!
Appreciate the Brookfield insights. BN is the one I'll be adding to my existing shares, for largely the same reasons as you.
Hi. I'm not invested in Brookfield family now, but I'm studying some documents for now. I saw that BAM has the better convertion of revenues in earnings, almost 50% rate. To me seems reasonable that BAM deserves a premium, so I think I will prefer it to the Corporation ;)
Hi Francesco, I think we should wait for at least 3 consecutive earnings reports after spin off to understand what are the margins exactly in asset manager amd corporation. The old financial data is for the combined business (before spin off) which can be misleading in my opinion. Even if BAM reports great numbers, BN still benefit from those numbers as they own 75% of BAM.
BAM manages all the assets under the Brookfield umbrella. So the majority of the assets they manage part of Brookfield infrastructure or renewable and so on. This means that it wouldn't be as cyclical as like regular asset managers (stock manager). BAM is an alternative asset manager. I do believe from my research that BAM will have the most stable revenue since it just manages assets of Brookfield without regards to profitability of all the Brookfield partners.
Thanks for your input. It's a complex business but my understanding from reading their documents is that corporation manages capital allocation at highest level (receiving and re-allocating capital to asset manager, operating businesses, insurance, and incubating new businesses) while asset manager manages the current/future investments and find undervalued assets. Still, I love to see BAM as a powerhouse and cashflow machine as 75% of their profits will come back to BN for re-allocation!
BN debt is a nightmare imo, 23 years to pay of there debt..while Bam requires 7 years..
no one seems to like to talk about the debt these companies have..
but if you think High debt is "less risky" cause they have stable cash flow, okey but the cash will go to pay down debt not to investors pockets..
idk bam looks okey with there return on cash but i feel like we cant predict how these two will do untill mangement can show that the plan they setup will fall into place.
BN owns 75% of BAM so whatever BAM does right, benefits BN shareholders too. These spin offs are just the management strategies to maximize value for shareholders. In 20 years, you'll probably have another 5-10 ticker symbols from Brookfield businesses in your portfolio if you just hold the mothership. It's less risky because they own majority stake in their independemt divisions which means they have financial flexibility.
Very interesting video. I am not invested in Brookfield but you definitely painted a broad picture for me to look at.
Thanks !!
I'm glad it was helpful! Cheers!
I’m going the opposite way to you. I like BAM better. BAM has no debt and will be a very capital light business. It doesn’t need to tie up capital in buildings, infrastructure, etc. It will be the profit engine of BN. They know it will trade at a premium when it grows at the 15-20% per year they are forecasting and it’s all falling to the bottom line. That’s why they retained 75% of it. BAMs the jewel of the corporation.
Thank you for sharing! You are probably right about profits and I believe both BN and BAM will make money and generate good returns for investors over long term. However, I still think BN is a safer bet. I'm not so sure about the growth rates, the 15-20% was for the old BAM and it is not clear how much of growth will come from main corporation asset allocation and how much will come from BAM. I guess we have to wait and see for a few quarters.
@Investing with Yashar I was also skeptical about the growth. But they repeated it so many times in their investor presentation last year... I think there are pre-commited periodic amount coming in (pensionfund contributions and the like) that make them so confident.
How could asset management revenue be more cyclical than the corporation that invests in the funds? If the management fees are tied to the performance of the infrastructure funds. Returns of the funds are more volatile than management fees. BN should loose more than BAM in down markets.
Yeah, did the same. BN 100 %. Has big enough share of new BAM.
Awesome video thanks!
Glad you liked it!
hope you bought more aritzia when it was at 45-46, aritzia broke 50 today 😁
Yes I did! They have their earnings report tomorrow which can move the stock again!
why is their "Changes in working capital" negative? How does it affect free cash flow on long term?
4% return on cash
4% return on equity
share delution
unstable EPS
unstable cash flow
48% payed in dividend
60% dept to capital
Most of its cash flow will go to debt.
BaM looks more promising but unstable.
Brookfield is a complex business with many hard assets and depreciation so cashflow or eps cannot be used to valuate their financials properly. You need to look at AFFO for these parts of their business. Their corporate debt is also was less than 20% I believe the rest are non-recourse debts based on assets. Overall, you cannot value BN using conventional metrics as they operate completely different.
.07 vs .32
They could privatize and simply delist off the market - they're not in business to make life easy for strangers
Believe it or not, the job of the CEO and management team in every profitable and well-run company is to make money for investors by maximizing the profits and revenue. Privatization is not profitable for shareholders if the shares are undervalued.
@@Investing_Yashar - that's there overall objective - to exit the overall public market - as undervalued as possible !
I am not naieve - it's been done many times in the past ...