Stocks A to Z / Stocks B / Brookfield Corporation (BN)
No. of Recommendations: 1
If not now...when?
No. of Recommendations: 4
.. BIP ...If not now...when?Never is one option.
Why not own BN only and be done with it. You will get exposure to all existing Brookfield entities including Oaktree, the upcoming insurance business and all future new businesses and acquisitions. Plus they will take care of reinvesting most of the earnings, which I prefer instead of receiving dividends. Starting from current price levels (for the record 29.15 on 10/27/23) for a holding period of at least 5 years should lead to good results.
FWIW, for my Brookfield allocation, BN is all I have. Over the past few months I sold all BAM which I received from the spin off and rolled the proceeds into BN. I hope it works out but who knows because there are no guarantees. All you can do as an investor is to keep an open mind and monitor actual business results like a hawk. I am eagerly looking forward to 3Q results from all the entities which will start flowing from next week.
However, if BIP in particular is what your heart is set on, I suggest going through everything below including all the reader comments, and then decide for yourself whether to proceed.
A Short Report Questions Brookfield Infrastructure And Makes Me Rethink My Position
https://seekingalpha.com/article/4644732-a-short-r...Brookfield Infrastructure: An Investment Holding Company At 2x NAV
https://seekingalpha.com/article/4643746-brookfiel...Dalrymple Finance Short Video
https://www.zer0es.tv/big-announcements/a-wasting-...Dalrymple Finance Short Full Report PDF
https://dfresearch.substack.com/api/v1/file/66530f...Brookfield Infrastructure Partners 2023 Investor Day
https://www.youtube.com/watch?v=eBYw7rQC374BIP 3Q earnings call on Nov 1, 2023
https://bip.brookfield.com/press-releases/bip/broo...
No. of Recommendations: 1
All the bear claims are being dismissed as not credible but this can bring down entire BROOKFIELD complex if not addressed.
No. of Recommendations: 6
All the bear claims are being dismissed as not credible but this can bring down entire BROOKFIELD complex if not addressed.
I am assuming you are referring to the short report. From what I could gather, the author is not alleging fraud or anything illegal. His main contention is that only a portion of BIP distributions are covered by actual cash dividends received by BIP. The rest is covered by asset sales and sale of (overvalued in his opinion) BIP units. The author is saying that BIP portrays FFO as free cash flow generated from operations, but in reality FFO includes BIP's share of earnings from its equity accounted investments which are not actual cash dividends received by BIP. More than half of BIP's investments are equity accounted.
Zooming out and looking at the big picture, BIP has been around for more than a decade. For such a long period of time, it is not possible to distribute more than value created without debt increasing to unsustainable levels. This has not happened. BIP is rated BBB+ which is investment grade.
At least for the past decade, it looks like distributions have been covered by overall value creation (cash dividends + asset sales + unit sales) and not increasing debt. Of course this may change because there has been a regime change. In the new era of higher interest rates, BIP can no longer depend on ever increasing asset and share prices. The declining share price reflects all these concerns.
Earnings call is only a couple of days away. Even though they may not formally acknowledge the short report, I am sure they will address the questions raised.
No. of Recommendations: 1
Thank you
Yes the short report is scaring people and calling into question how things are being accounted for and represented.
No. of Recommendations: 2
Saw this on SA. Seems to refute bear case?
KingXIV
Let me share another set of interesting discrepancies, which also support my view that BIP's Partnership Capital number is not meant to be a marked to market value of its net assets.
I will refer to the Schedule of Investments table in Appendix 4 of your report, which list the carrying values of each individual assets, as marked by BIP. (Keith, great work by the way! I printed your table out to help my own research)
A number of large investments show up with carrying values that don't pass the smell test.
I am not saying that my numbers (mainly historical purchase costs, recent rumor price tags) are better indictors of current value, but they differ so much from the "carrying values" that either something very bad is wrong with an asset, or the "carrying values" are not meant to be used for fair value/ MTM purposes.
NTS (Brazil pipeline): 31% carried at $119 million, implying a total equity value for NTS of $384 million.
Brookfield purchased 90% of NTS for $5.2 billion (likely debt free) in 2016, and was rumored recently to be shopping it around for between $4.7 and 5.7 billion (100% EV).
Local norm dictates that this asset is not highly levered, so it's unlikely that equity value is below $3 billion.
Pipeline Infrastructure (Indian gas transmission): 21% carried at $17 million, implying $81 million in total equity value.
Brookfield purchased the East West Pipeline for $1.9 billion (enterprise value) in 2019.
I can't find any news that may suggest this asset is in such great trouble that the equity value should be written down to merely $81 million. Again, as in Brazil, it's hard to lever the asset up to levels commonly seen in the developed markets.
UK residential infrastructure (I believe it is for HomeServe, not the tiny company BOXT): 15% carried at $17 million, implying $113 million in total equity value.
Brookfield bought HomeServe in 2022 for $5 billion EV. In early 2022, it acquired a majority stake in BOXT for GBP 20 million.
UK ports (PD ports): 59% carried at $189 million, implying $320 million in total equity value.
Brookfield was hoping to get GBP 2 billion for this asset back in 2021, and the local Mayor of Tees Valley was trying to bid GBP 1.1-1.4 billion (and rejected by Brookfield).
No. of Recommendations: 1
KingXIV profile picture
KingXIV
Let me share another set of interesting discrepancies, which also support my view that BIP's Partnership Capital number is not meant to be a marked to market value of its net assets.
I will refer to the Schedule of Investments table in Appendix 4 of your report, which list the carrying values of each individual assets, as marked by BIP. (Keith, great work by the way! I printed your table out to help my own research)
A number of large investments show up with carrying values that don't pass the smell test.
I am not saying that my numbers (mainly historical purchase costs, recent rumor price tags) are better indictors of current value, but they differ so much from the "carrying values" that either something very bad is wrong with an asset, or the "carrying values" are not meant to be used for fair value/ MTM purposes.
NTS (Brazil pipeline): 31% carried at $119 million, implying a total equity value for NTS of $384 million.
Brookfield purchased 90% of NTS for $5.2 billion (likely debt free) in 2016, and was rumored recently to be shopping it around for between $4.7 and 5.7 billion (100% EV).
Local norm dictates that this asset is not highly levered, so it's unlikely that equity value is below $3 billion.
Pipeline Infrastructure (Indian gas transmission): 21% carried at $17 million, implying $81 million in total equity value.
Brookfield purchased the East West Pipeline for $1.9 billion (enterprise value) in 2019.
I can't find any news that may suggest this asset is in such great trouble that the equity value should be written down to merely $81 million. Again, as in Brazil, it's hard to lever the asset up to levels commonly seen in the developed markets.
UK residential infrastructure (I believe it is for HomeServe, not the tiny company BOXT): 15% carried at $17 million, implying $113 million in total equity value.
Brookfield bought HomeServe in 2022 for $5 billion EV. In early 2022, it acquired a majority stake in BOXT for GBP 20 million.
UK ports (PD ports): 59% carried at $189 million, implying $320 million in total equity value.
Brookfield was hoping to get GBP 2 billion for this asset back in 2021, and the local Mayor of Tees Valley was trying to bid GBP 1.1-1.4 billion (and rejected by Brookfield).
No. of Recommendations: 1
Will be an incredibly positive earnings call, BIP made the normal gain, the 100% certain is 100% certain. Mentioned sales with successes "in the last three years" too which will make followers crumble with praise and admiration.
In the meantime the actual financial statements have some fun in them but only if you want to read a few footnotes and wonder what is in things like "other expense" which is added back to FFO, or Free Form Originality.
The game works and Bruce plays hard and above all mandates consistent figures which we all know from the past is what sells best.
In the meantime, even the balance sheet, which ordinarily isn't much stimulation from BIP, is quite interesting to me this year. But what the heck, manlobbi knows far more than me for sure.
No. of Recommendations: 2
Will be an incredibly positive earnings call, BIP made the normal gain, the 100% certain is 100% certain. Mentioned sales with successes "in the last three years" too which will make followers crumble with praise and admiration.The board knows you were being sarcastic, but Mr. Market apparently did not get it. Looks like he took you at your word and bid everything up.
BN +4.73%
BAM +2.65%
BPYPP +5.63%
BIP +10.82%
BEP +2.81%
BBU +6.12%
11/1/23
No. of Recommendations: 1
Just tell me why the shorts are wrong please
No. of Recommendations: 1
Baybrooke you continue to assault me which is fine. Your love for all things Brookfield is clear and consistent and we all know consistency is richly admired amongst all people in all cultures.
As to BIP, it may or it may not, be meaninful that in the lastest report 34% of cash expenses, this isn't depreciation, were removed from the FFO figures. I know given it is Bruce Flatt that you and others will devoutly refuse to investigate this issue and to your praise it has been igored in the past.
But the 34% exceeds the second largest 24% (can't remember precisely) which piqued my interest some and if it weren't Bruce you too - my guess only of course - would be quite interested.
As far as bottoms, it wasn't long ago that the bottom of a couple stocks I wasn't too keen on were posted with unbelievable fanfare, KMX at $100 and DG in the $150 range. My name was slaughtered there too. But all I did was offer a different view. Groups are groups though, and it wasn't tolerated. Interestingly, there was a time when there was more tolerance, the intense put downs weren't part of the game. But then too I disagreed on BPY and that was the end of it for my name.
Today? I can assure you that you would have a very hard time netting out positive for Brookfield Property. Why? Yes interest rates come into play but bunches of ill timed and poor purchase figures also come into play and it often, yes it often, is the trophy properties that were overpaid for.
It isn't against you that I stand, I just propose that we actually think for ourselves as to Brookfield entities, and maybe lessen the worship of Bruce?
Bottoms are bottoms and we love to pick and blame, we love naming those that maybe made a comment or two. Again all I'm trying to do is think, thinking should not be against rules in the world of worship.
As I have said for years, it seems to me that Bruce is obsessed with fast-fast-fast growth and he and the thousands working for Brookfield want constant action. I'd say with all others in this mindset that errors will be made, sometimes significant ones. Maybe Bruce is above that?
So in the past a growing, steadily growing, lack of internal profit generation would be supported by chosen asset sales to make FFO. The problem I see is that with things like BIP the internal operations are so far below making the required 8-15% every-single-quarter-consistent "growth" figure that tons of asset sales will be needed to "make it" or whatnot. If rates don't go right back down? Well, it may be hard.
Now just think of someone old like me, a guy who has 46 years of profit in Berkshire and 29 years of profit in AJG...and just think if I could get you guys to capitalize my FFO underwritten by asset sales at 10 times "profits" then think of the net worth I could claim by such actions? Hell my plan value might get to hundreds of millions.
No. of Recommendations: 2
And finally just to add to the entertaiment of this thread, once again I bought a slug of BAM yesterday.
Life is great...if you can stand it.
