Stock Tip Tuesday…

Brookfield Corporation (🇺🇸: 🇨🇦:$BN)

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One for the long haul 🕑

Alright, another week another stock tip. This time we are going for something a bit different. Today’s stock pick Brookfield Corporation (BN) is a longer term investment, I would recommend you hold, rather then getting out with earliest profits you can take. Here’s why ⬇

So, Brookfield Corporation is a is a Canadian financial firm you might or might not have heard of. It’s an asset manager that specializes in real assets like property, infrastructure, and renewable energy. They have over 200,000 employees and over the past 20 years, they have expanded into a global asset manager with over $850 billion in assets under management. They make money in a variety of ways investing their capital in real assets, investing money from investors and lastly, they founded and hold large stakes in 5 publicly traded partnerships,

• Brookfield Asset Management (BAM)

• Brookfield Renewable Partners (BEP)

• Brookfield Infrastructure Partners (BIP)

• Brookfield Business Partners (BBU)

• Brookfield Reinsurance (BNRE)

from which they collect cash distributions, management fees, and performance fees. It’s pretty fucking impressive if you ask me and a solid growth model too. This can be see by Brookfield’s private funds consistently beating benchmarks like the S&P 500.

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What sets it apart ?

For me the real power of this company is it’s ability in times of recessions. Brookfield Corporation builds a strong financial foundation and buys great assets at bargain prices from distressed sellers during these times.

This strategy can be seen utilized in their past. For example,

👉 during the 2007/2008 financial crisis, Brookfield bought a variety of undervalued shipping ports, rail infrastructure, and other global assets from a firm called Babcock & Brown. This preformed stupidly good as the economy recovered and made them a shit tone of cash.

👉 When Brazil faced a huge recession from 2014-2017, Brookfield bought gas pipelines and toll roads from sellers needing cash, securing long-term, inflation-indexed contracts, again making BANK.

👉 When Chile was a frontier market with little investor interest, Brookfield bought cheap electrical transmission assets, expanded them for a decade, and sold them later for a 16% annual return.

I could continue with plenty of these scenarios. However, I feel like you get the gist. They buy undervalued (but premium quality) assets during times of stress, expand them, and sell them for much higher valuations during bull markets. To add to this as Brookfield is so globally diversified, it also reduces their reliance on any one nation’s economy or politics. Helping them further in times of recession and stress.

Now if you haven’t kept your ear to the ground. There is a strong likelihood of a recession hitting in the U.S. in as close as the next 12 months. David Rosenberg an Economist who accurately predicted the 2008 crash said

This will give Brookfield another chance to put their strategy in play and make huge profits.

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That’s not all

If you are not convinced yet, ill leave you with a few more points to solidify my argument.

Firstly, Insiders own a large portion of the company, worth billions of dollars. Which is a great sign. They back their own company. Follow the Jockey, not the Horse…. remember (and if you don’t 😉).

Secondly, If we look to the analysts the vast consensus is the stock is massively undervalued and has a rating of Strong Buy. Now using these metrics isn’t my favorite way of evaluating stock picks. It’s like pissing in the wind. For ever buy there is a sell. However, when there is a large overall agreement it can give you a decent idea.

Thank you
That’s All Folks

Thank you for reading. Like usual. Not financial advice.

We don’t own stock in Brookfield Corporation (BN). Full disclaimer here

Cheers,