Subject: Re: Sell BAM, buy BN?
other alt managers are pretty near their 52-week highs. BN is not.
. . .
above is a good point. if you don't mind sharing, please let us wich other alt managers you are tracking/diversifying into. I would like to add to my tracking list and learn more.
alt manager 9.1 close 52-week high difference
ARES 103.18 104.48 -1.2%
APO 86.44 88.20 -2%
KKR 62.20 63.64 -2.3%
BAM 34.89 36.50 -4.4%
BX 104.49 109.99 -5%
OWL 11.99 14.04 -14.6%
CG 32.67 38.32 -14.7%
BN 34.68 41.59 -16.6%
Of the three managers off their 52-week highs by double-digit percentages, OWL and CG are both having well-publicized leadership issues. I don't know how to explain BN's underperformance except to observe that its 52-week high predates the BAM spinout in December. In fact, it was nearly a year ago, in September of last year. As we've discussed here, following the spinout BN's market valuation was hit by more than the 25% of BAM it surrendered and it has yet to recover.
Very little about BN has changed since before the spinout. All the usual suspects -- the commercial real estate exposure, the complexity -- were present both before and after. My wild-ass guess would be that spinning out BAM highlighted the simplicity and consistency of the fee business and made it possible for investors to sever it from everything else.
Management hoped the pure-play fee business multiple earned by the spinout would improve BN's valuation, given its majority ownership of that business. Instead, it may have emphasized or illuminated the fact that owning BN brings all the more opaque stuff, too -- questionable real estate valuations, direct investments in impenetrable private funds, etc. Now that investors can separate the fee business from all the rest by owning BAM, maybe the contrast has caused a devaluation of BN.
Like I said, it's just a guess. But market sentiment seems clearly to have favored Ares, KKR, Apollo and Blackstone over Brookfield the parent since the spin. The one-year chart comparing these seven tickers (left OWL out of the chart) is not pretty for BN (hope this link works):
https://rb.gy/dshq8
Alternative explanations welcome.