Bullboard - Stock Discussion Forum Brookfield Asset Management Voting Ord Shs Class A T.BN.PF.D

Primary Symbol: T.BAM Alternate Symbol(s): BAM | T.BN.PF.A | BKFOF | T.BN.PF.B | T.BN.PF.C | BROXF | T.BN.PF.E | T.BN.PF.F | BKFDF | T.BN.PF.G | BRCFF | T.BN.PF.H | T.BN.PF.I | T.BN.PF.J | T.BN.PF.K | BKFPF | T.BN.PF.L | T.BN.PR.B | BKFAF | T.BN.PR.K | BXDIF | BRPSF | T.BN.PR.M | T.BN.PR.N | T.BN.PR.R | BAMGF | BAMKF | T.BN.PR.T | T.BN.PR.X | BKAMF | T.BN.PR.Z

Brookfield Asset Management Ltd. is a global alternative asset manager. The Company invests client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. It offers a range of alternative investment products to investors around the world including public and private pension plans, endowments and foundations, sovereign... see more

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TSX:BAM - Post Discussion

Brookfield Asset Management Voting Ord Shs Class A > TD Raise Target

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Post by retiredcf on Sep 14, 2022 9:09am

TD Raise Target

By a buck to US$73.00. GLTA

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$51.33 | C$66.66

Investor Day Outlines Substantial Runway for Growth

Event

Yesterday, BAM hosted an Investor Day.

Impact: POSITIVE

Asset Manager: BAM expects to grow FBC to $1tln over the next five years (~20% CAGR) by: 1) deepening existing relationships (i.e., cross-selling); 2) originating new relationships; 3) accessing new distribution channels (e.g., retail wealth); and 4) broadening its product offering. Notably, the macro backdrop favours BAM's heavy weighting to real assets, which offer significant inflation protection (~55% of FBC). The company is a global leader in real estate, is dominant in infrastructure/renewables, and is a first-mover in transition investing.
Insurance Solutions: BAM has deployed ~$4bln of equity to insurance to-date, which the company expects to generate 15%-20% returns over time, as the high levels of cash/liquid financial assets are redeployed to higher-yielding strategies. The company has $40bln of insurance AUM and sees the potential to reach $225bln by 2027.
Capital: The corporation will own 75% of the manager and 100% of insurance. DE of $3.7bln (pro forma) is expected to reach $9.3bln in 2027 (~20% CAGR), which will be available to support growth, with associated optionality. Excess FCF will be returned to shareholders (H1/22 share repurchases of $450mm).
Five-Year Outlook: BAM outlined potential upside to $175-$198/share in 2027 for investors who hold both the manager and the corporation (total annualized return of ~30%+ vs. the current share-price). The partial distribution of a pure-play asset manager should attract a higher valuation for the manager, while preserving the synergies of the "Brookfield ecosystem", and will make the corporation's NAV much more transparent (~70%-75% will be in publicly-traded securities).

TD Investment Conclusion

We see very attractive upside vs. the current share-price and continue to view BAM as a core holding. Our target price assigns no value to carry, applies a 25x multiple to FRE, and values real estate at a ~30% discount to IFRS, and still offers a >40% implied return. We believe that the long duration/high growth-rate of BAM's FBC supports a 25x-30x FRE multiple and note that carry contributed TTM DE of ~ $0.30/share and has an accumulated but unrealized balance of ~$3.35/share. BAM also continues to sell real estate at premiums (not discounts) to IFRS.