Be kinde to folk. This changeth the whole habitat.
- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 7
Once again, not just good but fantastic posts on this board.
Will eventually get to Brookfield. But very briefly BAM should be trading at a normalised dividend percentage yield in the low to mid 3's rationally (requiring a stock price rise of 5/3.5 or over 40% to recorrect), so I would like to confirm what the *normalised* dividend is (the supposition here was 5% but I want to also check for sure!). It should be 90% of distributable earnings per share. Management fees (thus distributable earnings) have been growing faster than Brookfield conjectured seven years ago, at close to 20% a year but I also need to check to what extent that growth required capital investment from the larger BAM (in other word to what extend of that growth would really be on a per share basis if BAM was formerly separated).
- Manlobbi
No. of Recommendations: 4
So most of you who have been aware of the somewhat-at-times annoying ole dealraker's posts know that I'm not as much of a wild bull on the Brookfield bunch as Manlobbi is going to position (soon coming). But...I've owned the stock for a long-long-long time and I can't even begin to tell you how appreciative I am of the discussions we have here, they are simply fanstastic...fantastic with a couple exclamation points afterwards.
My view is, and has been for a long-long-long time and I've posted for a long-long time...as I watch and listen to Bruce Flatt and I listen carefully and make my best attempt to discern ('discern' is the perfect word here) what he is conveying in his in-person presentations and in writing? Here it goes as far as I can see...and yes I may very well be 'too deep' in my diagnosis, but still it has worked out somewhat right thinking this for some time (again, quite a while). Here goes:
I think Flatt has done the 25% spin-off of BAM to say 'Look right here people, THIS BSM thing is what we are all about...we are going to grow our management/fee business at a rate that is going to surprise you, even those who are rather super positive.' Will it affect the positioning and market price of BN? Absolutely yes it will.
Yea, I thing Flatt, and it is Flatt himself you can be sure, is strutting the BAM part by the spin-off, that it is going to grow big, or fast, or big time-- whatever wording you want to use. That's what I am sensing by his speech, demeanor, and his writing.
Brookfield as investors, will they prove far superior? I'm skeptical because they are going to seek growth-growth-growth. Others of course will strongly disagree. We have a market!
Owner of the Brookfield stuff for 28 years starting with a very small position (I liked the 'we own dams and such' story and already had some of that stuff elsewhere) that ain't so small anymore.
Have a good day people.
No. of Recommendations: 1
Of course I meant to pen THIS BAM thing.
No. of Recommendations: 5
hi,
longtime brookfield owner and motleyfool board lurker here...
agree that's flatt's enthusiasm is leaning towards BAM....after all , there was no secret regarding the slight taken towards the implied multiple of the asset mgnt component.
however, we should distinguish 'growth' for the new BAM versus the type of investments that the new BAM makes with conservative oaktree playing a major role. oaktree has been the epitome of margin-of-safety anywhere in the financial stack, not wherever there is max leverage. (we dont have a breakout of how much capital is oaktree's responsibility, and may never get such.)
lastly of interest to those that have read countless comparisons to kkr,apollo,blackstone : there was a nice summary of exec compensation linked below.
in summary, given forward performance is unknown, we dont know which of these entities are 'stealing' the most for us, but its clear who would be stealing the most FROM us !
https://edelweiss.substack.com/p/who-keeps-the-val...
No. of Recommendations: 10
<< Management fees (thus distributable earnings) have been growing faster than Brookfield conjectured seven years ago, at close to 20% a year but I also need to check to what extent that growth required capital investment from the larger BAM (in other word to what extend of that growth would really be on a per share basis if BAM was formerly separated).>>
To expand this, 5% dividend yield assumes either no real growth or at least some small lack of safety for durability of earnings. The rational quotation (and thus rational dividend yield, let us say) for BAM is a function of both safety of earnings sustainability, and the central expectation of (distributable, per share) earnings growth.
The latter (growth) we haven't seen in the context of BAM separated financially, as earlier it *could* potentially have been the case that when the fee business was part of the parent, capital from other corporate sources (rental income etc) was reinvested in large amounts to help realise the growth in manpower needed to raise so many flagship funds. No one has brought this up and hard to research but I'll look into it. I want to have a good grasp of how to expect BAM will grow distributable earnings on a per share basis without external investment from BN (earlier possibly less visible, but IF this was the former case and IF also continuing economically on the same course, then it would create share dilution for BAM). Two ifs, but possibly useful questions anyway.
(Investors may at times err in seeing some segment of a firm growing and think it is organic growth, when it is just capital investment. For example many 'cloud businesses' inside larger firms such as Google or Alibaba if put on the open market would be worth less than investors imagine, because they are growing from having huge capital dumped upon them, rather than organically growing. If separated out the cloud firms would be a disfunctional business with massive monthly share dilution, not visible when part of the parent. Amazon was particularly successful in cloud but it had the effect of massive investment from the books earlier on, plus share dilution of the parent over a couple of decades - the cloud segment would not have been possible as a stand alone non-diluted firm).
- Manlobbi
