I do like this, my only problem is that since management began speaking about their plan value, it has always traded at a 40-50% discount, so a gap up in price would not be feasible. I do think it's a high quality stock, but it's not going to be booming any time soon, the accounting is still madly confusing.
The one, maybe two, changes are that the real estate issue seems (refinancing wave) seems to be a non-issue and that the insurance portfolio is a means for monetizing their highest quality real estate assets. Turning some of the $24B of real estate into cash would help close the gap - at the very least they can use some or all of that cash to repo stock. I would expect the sales to occur over the next 2.5 years.
Should we use BAM's market value to calculate BN's PV (as BAM is valued at a higher multiple than KKR and BX), or make a conservative assumption that over time BAM will trade closer to 18-20x DE and hence calculate the BN's PV from that normalized BAM's market cap?
I think it is fair to use the current market value for BAM. One unique feature of BAM is that it pays out all of its excess FCF as a dividend. This is brilliant on BN's part. The high dividend yield support's BAM's stock price. As BN own's most of BAM, they get the dividend and can allocate as they see fit. If BAM's price becomes too cheap, then BN could buy more BN for their own account.
Thank you for this. I appreciate your thoughts about the catalysts. I learned something new about Brookfield, as always from your posts/articles.
I do like this, my only problem is that since management began speaking about their plan value, it has always traded at a 40-50% discount, so a gap up in price would not be feasible. I do think it's a high quality stock, but it's not going to be booming any time soon, the accounting is still madly confusing.
The one, maybe two, changes are that the real estate issue seems (refinancing wave) seems to be a non-issue and that the insurance portfolio is a means for monetizing their highest quality real estate assets. Turning some of the $24B of real estate into cash would help close the gap - at the very least they can use some or all of that cash to repo stock. I would expect the sales to occur over the next 2.5 years.
Needless to say, I think this is wrong. You are way too accepting of management's view . IMO, of course.
Should we use BAM's market value to calculate BN's PV (as BAM is valued at a higher multiple than KKR and BX), or make a conservative assumption that over time BAM will trade closer to 18-20x DE and hence calculate the BN's PV from that normalized BAM's market cap?
I think it is fair to use the current market value for BAM. One unique feature of BAM is that it pays out all of its excess FCF as a dividend. This is brilliant on BN's part. The high dividend yield support's BAM's stock price. As BN own's most of BAM, they get the dividend and can allocate as they see fit. If BAM's price becomes too cheap, then BN could buy more BN for their own account.