TSX:BAM - Post Discussion
Post by
retiredcf on May 11, 2021 9:10am
TD
BAM.A is on their Active Buy List with a US$63.00 target. GLTA
Brookfield Asset Management Inc.
(BAM-N, BAM.A-T) US$46.44 | C$56.33
Q1/21 Earnings Preview
Event
BAM will report Q1/21 results before market open on Thursday, May 13.
Impact: NEUTRAL
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OFFO/Share: We expect double-digit y/y growth in fee-related earnings, reflecting market appreciation across the listed affiliates/credit strategies and fundraising progress. The latest flagship distressed debt fund should hold a final close in H1/21 and the industry press (PERE) has reported that BAM is seeking $17bln for its latest flagship real estate fund, well above the $15bln raised for BSREP III in 2019. The few businesses that were affected by COVID-19 should benefit from the continued global economic re-opening, although BPY's Q1/21A results were lower-than-expected. We have also adjusted our forecast to reflect West Fraser's acquisition of Norbord on February 1, at which point BAM would have stopped accounting for its stake as an equity investment.
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Capital Recycling/Deployment: BAM and its affiliates have leveraged strong market conditions to recycle capital. BAM completed a secondary sale of BEPC shares for $750mm and has significantly reduced its position in West Fraser, raising gross proceeds of ~$1bln and monetizing a legacy investment during a very strong wood products cycle. BPY closed the sale of its Northeast U.S. life sciences office portfolio, while BBU monetized a portfolio of public toehold positions and completed two secondary sales of GrafTech, which should trigger further carried interest realization. The environment for capital deployment has almost certainly become more competitive, whereby BAM may be more of a seller than a buyer in the short-term, although the company has typically been able to use its size/scale/operating capabilities to unearth opportunities across the cycle.
TD Investment Conclusion
We believe that an investment in BAM provides exposure to a very high-quality portfolio of real assets, with the added leverage of a world-class asset management franchise. BAM's latest round of flagship fundraising is underway, and we expect related announcements to be positive catalysts for the stock over the next 12 months. This round will raise capital for the company's inaugural Global Impact Fund, which we believe gives BAM the potential to carve out an early-mover advantage in this emerging asset class, much as it did in infrastructure more than 10 years ago.
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