Please be positive and upbeat in your interactions, and avoid making negative or pessimistic comments. Instead, focus on the potential opportunities.
- Manlobbi
Stocks A to Z / Stocks B / Brookfield Corporation (BN)
No. of Recommendations: 1
Did Bruce just do a personal move from BAM to BN?
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What makes you say that?
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That link didn't bring up anything related for me. A cursory search didn't bring up anything either.
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Bruce sold $50 plus mil of BAM and bought $50 plus mil of BN as per a 5/19/23 SEDI insider filing.
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I wonder if he has to pay tax on his sales, or if the company takes care of it.
I wanted to do the same after the spin-off, but would have been too expensive tax wise.
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Could someone explain why the big difference in pricing for both BAM and BN transactions. There are three transaction for both stocks. For BN, two are in the $40+ range and the other in the $31 range? Similar for BAM?
Also, there were big sales and purchases by Flatt on May 9, so it is more than $50M
Pollock on May 9 also sold BAM and purchased BN.
Is there any reason for not following Flatt and Pollock and selling BAM to purchase BN??
Craig
No. of Recommendations: 5
Could someone explain why the big difference in pricing for both BAM and BN transactions. There are three transaction for both stocks. For BN, two are in the $40+ range and the other in the $31 range? Similar for BAM?
BN and BAM trade on both the New York and Toronto exchanges. I'm assuming the trades in the 40s are on the TSX, in Canadian dollars.
Is there any reason for not following Flatt and Pollock and selling BAM to purchase BN??
Just keep in mind these are very wealthy guys trading on the margins of their holdings. Flatt now owns ~66m shares of BN and ~15m of BAM, according to the filing. Looks like he exchanged about 1.3m from one to the other. So would have been like 65m and 16m before the trades. He reduced his BAM holdings by about 6% and increased his BN by about 1.5%. It's so insignificant to his overall wealth the main purpose might be signaling the market. He's been trying to do that in his letters to shareholders but it hasn't had much effect to date.
BN seems clearly the more undervalued of the two at the moment, as we've discussed here, but there's no telling how long it might take for that undervaluation to be resolved. This is generational wealth for these guys. They can wait a long time.
No. of Recommendations: 1
Thanks for the thorough reply.
Considering BN seems to be undervalued, I decided to follow Flatt and sell a portion of my BAM and purchased BN
Craig
No. of Recommendations: 2
Considering BN seems to be undervalued, I decided to follow Flatt and sell a portion of my BAM and purchased BN
Just following up on my post from 1.5 years ago. So far, my decision to sell BAM and buy BN has not worked out well. Perhaps it will change for the better after BN earnings next week????
Aussi
No. of Recommendations: 2
did the same, but dont see it as disaster.
this is mostly because, for this period, multiple expansion rate in bam >bn. (note bam mutiples already started out higher !)
which seems ~100% unpredictable.
and if you dont have faith in the bam multiples, then you are not happy either way given its value within bn.
No. of Recommendations: 2
I agree, not a disaster and I still own some BAM. So, I am enjoying watching the race!
Aussi
No. of Recommendations: 3
I own both. I recently sold some BN to pay off margin loans and purchase more TSLA.
The price of both BAM/BN is up a lot in the last year. Doesn't mean they are overpriced but the price did move up more than value.
I like BAM because it looks like the better business longer term. With the restructuring, I expect BN to spin out their 75% interest in BAM. Please someone correct me if this is not accurate. I never listened to the call and acted on one small thing I read.
The rest of my portfolio is higher risk. I need to not lose this money. BAM has no debt which makes it far less risky to me.
Basis on these is very low and these are in taxable accounts. I'd sell more if the tax bill wasn't so painful.
No. of Recommendations: 4
I expect BN to spin out their 75% interest in BAM. Please someone correct me if this is not accurate.
In a sense you could say that BAM is being “spun out”. But BN are purchasing all the newly issued shares back that they they are spinning out. The result is that BN own the same 73% of BAM that they own right now, but instead of owning it privately they will own the public subsidiary.
There is no economic effect as even the treatment of dividends received by BN from BAM are taxed in the same way.
This of course requires BAM to issue an enormous number of public shares to represent this 73%. But they will all be taken up by BN instantly, so there is no market pressure whatsoever.
The purpose is simply structural elegance. They will then own *purely* public shares of all the main subs, BBU, BIP, BEP and BAM. But more importantly rhe BAM public entity itself will represent the whole business rather than quarter share of it, which indeed is a little confusing when looking at the market cap for new investors.
The odd one out is their commercial property business as they are for now keeping that privately owned. That was, conversely, formerly public and then made private during Covid, as they felt the market was pricing it too pessimistically at the time.
They are definitely on the hyperactive side when it comes to switching ownership between private and public. When a public sub trades too cheaply then it can actually be a positive phenomenon because the shares can be repurchased for a bargain.
Like many BN moves, it is best to view this as benign and an small incremental optimisation, rather than anything important. They like doing these small “hairdressers” moves, and it bothers some investors as overly fiddly, but I absolutely don’t mind. Just view is as a small tweak.
Another example of such a small move is that you can buy shares of BNT instead of BN which are slightly better. In no way inferior, marginally superior and convertible back to BN. You can convert BNT back to BN any time you want, but in the meantime the dividend is paid without withholding tax taken out if you are a non-US investor. It is classed as a capital return rather than a dividend. For most residencies, say Australia, you pay the same tax anyway (as you can no longer apply the 25% withholding tax as an offset) - BUT if you live in country with dividend tax lower than the 25% withholding rate, then it is better to own BNT than BN. I live in Monaco, so tax is something old fashioned and quaint that I ignore, and any papers relating to tax posted to me I instantly bin, so this is how I own BN - through BNT. That saves me 25% on the dividend - an extra return for free of about 0.15% each year given that the dividend yield is 0.6%. If I owned BN I wouldn’t get that extra 0.15% pa. So that is small - but another great example of an “incremental optimisation”, Brookfield-style.
- Manlobbi
No. of Recommendations: 1
Another impact from the change along with moving their HQ to NY is that the Buffett indicator (MarketCap/GDP) will now be higher. BAM market cap is going from about $20B to $80B and is also moving to NY. Therefore, with no underlying change in anything, the Buffett indicator will become higher and indicate more over valuation of the market. I have my doubts about the indicator!
Aussi
No. of Recommendations: 1
In a sense you could say that BAM is being “spun out”. But BN are purchasing all the newly issued shares back that they they are spinning out. The result is that BN own the same 73% of BAM that they own right now, but instead of owning it privately they will own the public subsidiary.
Thx. I think the pure play advisor fits my needs a little better.
I'd love to see Monaco some day. I started a watch collection a few years back. Specialize in "white trash" watches. Basically, Rolex with catchy names: Panda, Pepsi, Hulk etc. 😃 I'll bet they've got some great boutiques there.
No. of Recommendations: 1
...it is better to own BNT than BN. I live in Monaco, so tax is something old fashioned and quaint...
interesting.
seems the worst of both worlds in the u.s.
would happily pay similar taxes to escape this kakistocracy, but many nice places dont want people unless they have a 0.1%er level of capital.
i looked at moving to new zealand during trump term 1, and the rules were rather narrow. even having relatives there was not much help.
will have to research the world again.
as the IRS gets defunded, i have no doubt they will err on the side of (inadvertent) greater\double taxation in more complex scenarios for ex-pats.
