Brookfield: “Terrific” Inflation Hedge
07/01/2014 10:00 am EST
While the financial crisis of 2007 may have started in the US, the contagion quickly spread around the world; likewise, when the next inflationary bubble blows up it is much more likely to impact multiple global regions, cautions Benjamin Shepherd in Inflation Survival Report.
Just as central banks are thinking beyond their own borders, investors concerned about inflation must look at hedges with a more global character, such as Brookfield Asset Management (BAM).
The company bills itself as a global alternative asset manager, with more than $190 billion of assets spread across 20 countries.
That includes $109 billion of property investments that encompass more than 330 million square feet of office, retail, industrial, and multifamily properties spanning North America, Europe, Australia, China, and Brazil.
It also manages more than 200 hydroelectric plants in the US, Canada, and Brazil and 11 wind farms here in the US. It has another $29 billion invested in ports, toll roads, railways, pipelines, and farm and timberland on five continents.
Brookfield is run almost like a private equity firm, investing its own money as well as that of its shareholders and clients into its projects. Those clients include public and private pensions, sovereign wealth funds, and insurers.
Over the past three years, the company has generated average revenue growth of 17.5% with net income growth of 13.4% over the same period.
Through savvy acquisitions, it has also grown its book value per share from $5.63 a decade ago to $28.89 today, while keeping its debt-to-equity ratio at around 2.5 times.
The greatest risk to the company now would be another significant downturn in the global economy, but that seems like an extremely unlikely scenario with all of the world's central banks in a highly accommodative mood.
A perfect combination of income-producing hard assets and global diversification, Brookfield Asset Management is a terrific inflation hedge up to $51.
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