Global Managers: Assets for the Long-Term

10/20/2015 9:00 am EST

Focus: FINANCIALS

Charles Mizrahi

Editor, Park Avenue Investment Club and Inevitable Wealth Portfolio

If you are not focusing on the underlying worth of the business when buying a stock, I’m sorry to say that you’re speculating, explains value investor Charles Mizrahi, editor of Hidden Values Alert.

A speculator is someone who is trying to guess the price of an asset by predicting how others will behave. In other words, a speculator tries to predict crowd behavior; it’s that simple.

Trying to predict how a crowd will react during times of extreme greed or fear is a very difficult game to play.

The long-term record for speculators, after taxes and commissions, isn’t that great. Even when they are right...speculators often confuse skill for luck.

On the other hand, if you’re spending your time understanding the underlying value of the business and buy only when you get more value than you pay...then I’m happy to say you’re an investor.

Great investors, on the other hand, focus on the long-term. They understand, through years of experience, that it makes more sense to follow a tried-and-true process than focus on the short-term outcome.

Below, we look at two global firms that qualify as long-term investments, not speculations.

Brookfield Asset Management (BAM) is a global alternative asset manager with over $200 billion in assets under management.

The company has a 100-year history as a global investor, operator, and leading asset manager of high quality alternative assets.

We view this firm as a leading global franchise with integrated investment, operating, and financial teams in over 20 countries.

The company has significant alignment of interests; managers are 20% and 40% invested alongside their clients in private funds and co-investments. And there is about 20% ownership of common shares by management and directors.

Kennedy Wilson (KW) is a vertically integrated global real estate investment and services company with over $18.1 billion in assets under management.

The company has over 450 employees in 25 offices throughout the United States, the United Kingdom, Ireland, Spain, and Japan.

Founded in 1977, Kennedy Wilson employs over 500 professionals in 25 offices throughout the US, UK, Ireland, Spain, and Japan and works with over 4,000 operating associates.

Since going public in 2009, Kennedy Wilson’s real estate investments have produced a 30% gross IRR and 1.7x equity multiple.

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