No. of Recommendations: 4
Thanks everyone for the super insightful comments. It's noteworthy that no one said sell and run. Seems to me we all, including our super skeptical friend dealraker!, want to continue to stay invested in Brookfield. We just need to think about the best position size to suit our individual situation. Continuing these discussions will obviously help in that regard.
If something blew up tomorrow, some accounting maneuver that turned out to be illegal, would any attentive shareholder honestly be shocked?
Actually, yes I would be shocked if it came to light that they intentionally engaged in illegal and fraudulent accounting in any material way leading to a major blow up. Am I being too naive? I suppose mistakes due to negligence or incompetence where they end up paying a fine to regulators for non-compliance could happen, although I am not aware of even that happening to Brookfield in the past. But illegal accounting orchestrated by senior management? Yes, that would definitely be extremely shocking and disappointing.
The reason I would be shocked is because of a good point that Manlobbi made. Just look at the scale and frequency of transactions. The numerous parties involved in each transaction. Tens of billions of dollars flowing like water. Deals being made seemingly daily. Institutional investors, sovereign wealth funds, lenders, banks, auditors, regulators, retail investors, buyers and sellers of all stripes across multiple continents participating. Surely there is a whole lot of due diligence going on. No? Is it possible to commit accounting fraud in this type of an endless fund raising and deal making environment? How does this compare with Enron which you said you have been reading about recently?
A revolving C-suite door is also a telltale sign of questionable management integrity. We don't see that at Brookfield. It's a very stable senior management team. It's also been several years since Howard Marks and Bruce Karsh of Oaktree joined Brookfield after they agreed to get bought. They too seem to be getting along fine.
