No. of Recommendations: 4
For the record, I do not question Brookfield's accounting as per the figures themselves. What is evident though is that both DE and FFO have such leeway and thus management options are many to make a desired or what I'd call "celebratory" figure. And even with this, as a shareholder, I would not mind one bit if it was done to bridge a brief poor period. But from my reading I think this has been done for some time now, to the point of ad nauseum.
I think higher interest rates and increased relative debt have hurt Brookfield more than management is presenting and more than shareholders want to do the homework (it takes only minutes) to accept, and that this is throughout the organization. I think that real estate, both purchases (many clear examples to me) in recent years and the oddities of Covid and work-from-home have put more stresses, far-far more, than management wants you to hear.
I think the spin-out of BAM is dilutive to outside passive shareholders in two ways. I think several deals celebrated as homeruns were zero gain given what I see as all things involved in the transactions.
I think Bruce is as desparate for growth as anyone I've ever seen, and I can tell you with near 50 years of watching I've seen a few. Too fast for sanity? Could be, we will see.
I do think Brookfield has tremendous leeway, even today, to make some numbers that they want (those very adjustable/maniplatale DE and FFO things) if either or both of the following happen:
1) They can sell that asset managing business and get huge inflows to fee;
2) They can find lenders who know full well going in that any downturn will result in massive loan restructurings.
1) and 2) above offer Bruce options that others would die to have. The problem, and it is the biggest problem of all now (that's today) in my view, is that Bruce has an ego to mantain and I'm pretty sure he's gunna do some not-so-classy or maybe better said "not so Buffett-like" stuff to make sure something close to home continues its ascent of upwards to the right (on the charts). That close to home may get a tad not-so-admired by shareholders.
We will see. When I was a younger man, and things like my Brookfield investment actually mattered to my wellbeing, I'd do a lot more study. Today I do not need to and simply will never have the interest to do so.
I do very much enjoy the stimulation of the Brookfield yard sale. What I do not understand is investor willingness to just worship whatever DE and FFO numbers are used by management. I'm 100% certain that with any other entity on earth, and that would include Berkshire, investors would not under any circumstances simply go aroud for years quoting managments claims of DE and FFO without a clean/clear/precise study of how these figures got added up.
