Financials

Report by Abacus Research

Abacus revisits BN after a 70%+ rise since their Jan 24 write-up, arguing the fundamentals remain as compelling as ever. They still see a 22% IRR over the next 2 years - even assuming a persistent ~30% SOTP discount. BN’s thesis is simple despite its perceived complexity: a longstanding focus on infrastructure positions it as a major beneficiary of US on-shoring and increased infrastructure spending, while structural growth tailwinds support its insurance and wealth platforms (Brookfield Wealth Solutions is highly attractive at ~1x book, given 15% ROE). Although BN is improving its communication, Abacus argues few investors appreciate the value, leaving ~35% upside to their TP of $63.

Financials

Report by Veritas Investment Research

Veritas presents their outlook for Brookfield Corp, Brookfield Asset Management and relevant affiliates. Areas of focus include: 1) Why insurance growth targets may fall short, highlighting inconsistencies in management's guidance using their own disclosures. 2) BAM's recent growth stems largely from related-party transactions and goalpost shifts which may not have been understood to be part of management's original guidance. 3) ~40% of BN's distributable earnings lack underlying cash flow backing, funded instead by return of capital, intercompany equity infusions and subsidies. 4) Adjusted payout ratios. 5) Valuation misconceptions.

Financials

Report by Abacus Research

BN is a work in progress. Today, it is complex and messy, but that is the opportunity. Abacus sees a potential 20% IRR over the next 5 years based on: 15% NAV growth, plus 5% from closing of the 30% discount to NAV. They are attracted to alternative asset managers in general as the structural tailwinds are strong. Cyclically, alt managers should see earnings recover in 2024 and 2025 with M&A transactions and fund-raising recovering. Abacus believes exaggerated real estate fears are providing BN at a discount to their estimated fair value. Management has the cash flow and is motivated to close this discount. TP $65 (60% upside).