Financials
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.
Edition: 225
- 28 November, 2025
Brookfield: Sifting through the complexities
Financials
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.
Edition: 203
- 24 January, 2025
Financials
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).
Edition: 179
- 09 February, 2024