In late October, at the Baron Investment Conference, I listened to Bruce Flatt, CEO of Canadian money manager Brookfield Asset Management, recalls Mark Skousen, leading growth and income expert and editor of Forecasts & Strategies.
The Toronto-based global money manager which has invested more than $500 billion in long-life, high-quality assets and businesses in more than 30 countries.
It has invested heavily in infrastructure, including utilities, pipelines, renewal energy and data, an area that needs to grow a lot more. It represents the future of global growth. I was impressed. BAM has had a spectacular track record, and that trend is likely to continue.
The global manager is invested in four publicly traded partnerships: Brookfield Property Partners (BPY), Brookfield Infrastructure Partners (BIP), Brookfield Renewable Partners (BEP) and Brookfield Business Partners (BBU). However, none of these have done as well as the parent company.
It recently announced a co-bid with Singapore for a $17 billion German elevator business. BAM has also invested in private equity, including acquiring a 62% stake in Oaktree Capital Group.
Flatt explained, “If many people are bidding up infrastructure in a certain country, we just don’t participate. We have 29 other countries we can go to, we have three other businesses, so we can ebb and flow our capital. The worst thing anyone can do is have too much money in one sector and need to put it to work.”
Earnings have skyrocketed recently on steady increases in revenue, up 21% to $69.3 billion in the past year. BAM has $7.6 billion in cash, plenty to cover its $130 billion in long-term debt.
BAM has a fairly steady dividend policy and is currently paying a quarterly dividend of 16 cents per share. I expect the company to increase it again this year, since BAM only has a 17% payout ratio.
Even though Brookfield shares have risen sharply over the past year or two, they are still only selling for 15 times earnings. It looks like they have more to run.
