Is BN like a Canadian version of BRK.B.
With the major difference BN pays a small dividend and breaks up its assets like BAM.
Would you own both or do you prefer one over the other.
Thank you.
Mike
We think BN follows a similar approach compared to BRK.B in term of its business model. BRK.B uses its insurance float to invest and BRK.B is generally more flexible in terms of its investment universe as the company can buy either public equities or private companies. BN can as well, but invests mainly in long-duration assets such as utility, renewable energy, real estate, etc. It ususally makes private deals but on occasion will make a bid for a public company. BN uses funds raised from its asset management business along with its float from other subsidiaries to invest. It currently has $140B in available capital and we would expect it to be very active if markets stay weak. We think both are undervalued compared to their underlying assets and earnings power. As for BRK.B, it chooses to repurchase shares when the stock is cheap. On the other hand, due to the complexity of its holdings BN, BN has chosen to spin out companies so that investors can value its parts more appropriately as stand-alone entities while conserving funds for reinvestment.
We think either strategy could work to unlock shareholder value, we would comfortable holding both, but we prefer BN due to its smaller size and longer runway to compound.