-
Brookfield Infrastructure Corporation Class A Exchangeable Subordinate Voting Shares (BIPC)
-
Brookfield Renewable Corporation Class A Exchangeable Subordinate Voting Shares (BEPC)
-
Brookfield Corporation Class A Limited Voting Shares (BN)
-
Brookfield Asset Management Ltd. Class A Limited Voting Shares (BAM)
If I wanted to trim the number of Brookfield investments by owing one or two, which one would you recommend and reasons please.
Thank you,
BAM earns revenue on fees on managed assets and performance revenue. These fees are similar to mutual fund companies, the only difference is BAM’s products include strategies in different fields such as real estate, credit, hedge funds, etc. which are mostly private and only certain clients (institutions, accredited investors, high net worth individuals, etc.) are allowed to access these products. BAM pursues an asset-light model, its direct competitor includes BX, KKR, and ARES. In addition, 90% of BAM earnings will be paid out as dividends, and distributable earnings are expected to grow 15%-20% in the next 5 years from management guidance.
BN now operates as a holding company that owns stakes in different companies that are either private or public such as BIP (27%), and BEP (48%), BN also holds 75% of BAM and still has significant exposure to BAM going forward, paying a lower dividend yield than BAM, and focusing on reinvestment. Management expects BN to compound intrinsic value per share at 15% on average across market cycles.
We like most of Brookfield's publicly traded entities, BN and BAM would be our core holdings. That said, BIP and BEP could have some capital appreciation potential in the near term if rates decline. If we HAVE TO pick between them, we would wait to see how things develop at BIP and BEP for a few quarters and then one could reinvest the proceeds later into BN and BAM accordingly.