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BAM is Barron's worst call of 2007-2008 saying its like a Buffett Investment



February 13, 2009 – Comments (4) | RELATED TICKERS: BAM

Barron said BAM going to $70 LOL, did they mean $17?

Brookfield Asset Management: Low Profile, High Performance - Barron's

by: SA Editor Judy Weil February 25, 2007 | about stocks: BAM
Annotated article summary from this weekend's Barron's; receive all our Barron's summaries by signing up here:

A Different Kind of Buyout Firm by Michael Santoli

Summary: Canadian Investment firm Brookfield Asset Management (BAM) focuses on real estate, hydro-electric plants ($5 billion worth), 2 million—and counting acres of timberland, power plants in emerging economies like Chile, and the traditional specialty finance fare. To grow operating cash flow per share by 35% in 2006, 45% in 2005, double its share price since 2004 to $55, and obtain a $20b market value from $70b in assets under management, BAM used a Buffett-like business model: 1) Strict value investment. 2) Contrarianism. 3) High quality long-term asset purchases after extensive research. 4) Taking small positions in new markets to learn the business. 5) Retaining good management. Assets are deemed investment-worthy by requiring minimal ongoing capital investment, steady, growing cash flows, and requiring reasonable debt for purchases. BAM recently profitably walked away from a bidding war over Mills Corp. (MLS) with Simon Property (SPG), in order to stay within its return-on-value guidelines. BAM's next focus is on infrastructure such as ports, pipelines and railroads. Rivals like Goldman Sachs (GS) are following suit, which BAM CEO Bruce Flatt says could pressure prices in the short-term, but in the long-term will create new markets. Barron's Bottom line: BAM's Buffett-like investments could yield more Buffett-like profits, sending shares to $70.

4 Comments – Post Your Own

#1) On February 13, 2009 at 1:10 PM, DiabloD3 (< 20) wrote:

BAM may still prove to be an at least decent investment yet. They seem to be heavily invested in foreign investments, and Wall Street has (in their usual ignorant fashion) snubbed foreign investments in our recession.

I don't own any BAM, but I would consider buying some if I had room in my portfolio if I could get it for below $16.

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#2) On February 13, 2009 at 1:14 PM, retailsails (98.37) wrote:

Actually, of all of their calls in 2007 BAM was far from the worst, more middle of the road.  Overall, their track record has been awful over the last couple of years, but at least they have a scorecard of all their picks...

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#3) On February 13, 2009 at 1:20 PM, Seano67 (24.42) wrote:

I don't know. All these 'next Berkshires', that's a heavy and in my opinion highly unrealistic expectation to live up to. That's part of the premise why I bought into Leucadia (well, that and their management has got a fantastic track-record). They were all hyped-up as being a 'mini-Berkshire' in the making, but LUK has tanked too right along with the rest of the market, and right along with Berkshire Hathaway for that matter.

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#4) On February 13, 2009 at 3:59 PM, IBDvalueinvestin (98.49) wrote:

fORBES gets into the act , LOL

Brookfield Bottom Feeding

Peter C. Beller, 02.13.09, 03:15 PM EST

The big commercial property owner says real estate prices are low enough to justify buying. Brookfield Asset Management Inc.02/13/2009 3:56PM ET$15.86$0.785.17%1 day3 mo1 yearAdvancedAt A GlanceChartNewsPeopleBATS Real-Time Market Data by Xignite

Looking on the bright side of the crashing real estate markets in North America, one of the continent's biggest property investors is hunting for bargains.

Brookfield Asset Management, a Toronto-based property manager, apologized to shareholders on Friday for poor performance last year but struck an optimistic note: "The illiquidity of the markets is presenting us with investment opportunities which," the company said in a letter to shareholders, "should enable us to earn returns far higher than we would normally expect."

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Brookfield’s shares lost more than half their value last year as profits dropped 17.5%, to $649.0 million from $787.0 million. “As substantial shareholders ourselves, we empathize with you,” managers wrote. Operating cash flow, a profit measure that excludes non-cash charges such as depreciation, fell 25.4% to $1.4 billion from $1.9 billion.

Brookfield Asset Management (nyse: BAM - news - people ) owns office buildings, hydroelectric plants and timberland and sold over $1.0 billion in assets last year to raise cash as credit markets tightened.

Fourth-quarter earnings fell more than half from 2007 but well above what analysts had predicted. In the three months ended Dec. 31, Brookfield’s profit fell 51.7%, to 27 cents a share, from 56 cents a share, in the last quarter of 2007. Analysts, however, had predicted only 16 cents a share, according to Thomson Reuters, and Brookfield’s shares traded up 4.8%, or 72 cents, to $15.80 late on Friday.

Brookfield said it would pay a dividend of 13 cents a share, unchanged from 2008.

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