Brookfield Asset Management, Inc. (USA) (NYSE:BAM)

Brookfield Asset Management is a best-in-breed asset management company focused exclusively on delivering value to shareholders by producing increasing, recurring high quality free cash flow. The recent pull back, which I believe is mistakenly predicated on problems in the U.S. housing and Commercial Real estate markets, provides a very compelling and safe opportunity to buy into what I consider to be one of the pre-eminent wealth creation companies in the world today.

BAM's basic strategy is to opportunistically aquire and manage long-lived assets, at reasonable prices, that generate sustainable and growing free cash flow, and finance them with cheap debt and equity financing, and manage them actively to maximize total returns. Asset classes include commercial and residential property, financial assets, power generation and transmission, timberlands, and renewable energy.

Currently trading at around 10x free cash flow as well as at a decent discount to NAV (which is ludicrous relative to this businesses long term earnings power)...BAM offers investors a truly compelling opportunity for patient, long term investors.

Asset manager, with about 1/3 of its assets in, and just over 50% of income from, office property holdings in the US, Canada, Brazil, and the UK. Also has $10b portfolio of power generation assets, primarily in the form of hydroelectric plants (concentrated in northeast US and Canada). Also runs approximately $18 billion of specialty funds, with similar focus on infrastructure and property. They pool (and lever up) outside investment side by side with their own investment in these funds to realize capital gains and management fees. Their Brazil exposure is especially noteworthy, as they are heavily invested there and have been for a very long time (they say 100 years).

Lastly they hold about $2b in timberlands. Recent acquisitions include Longview Fibre (which they already had a large stake in), Acadian Timber Fund (partial stake), and an ultimately unsuccessful bid for Mills.

High valuation is the biggest concern. Trades at 28x 2008 earnings, and almost 4x book value. While they are diversifying aggressively, a decline in office real estate values, and rents, could hit the stock hard.

Already with $50 billion in assets under management. They indend to double that by FY10. Great cash flows, geographically diverse, solid assets and a decent dividend. This is a great long term steady company.

Smart Focused Managment. REIT like businesses that focus on the value of the assets. Willingness to walk away from deals that are no longer priced right. Diversification and an interesting ability to learn about a business before investing in it.

for the long haul

Finally, BAM is on sale. You just don't get too many opportunities to invest in a management team like this at a reasonable price. This company controls a vast portfolio of quality, stable, cash-producing assets, and features a management team that really knows how to allocate capital prudently. Like BRK and MKL, I think this is one of those few companies that you can hold onto forever.

Great assets, great business. A bit tough to analyze with so many moving parts, but worth the effort. Earnings can be up and down but it cranks out the cash. Should be a solid performer for years to come.

BAM is truly a best in breed asset management company focused exclusively on delivering value to shareholders by producing increasing, recurring high-quality free cash flow. Due to the recent misunderstanding relating to its potential exposure to the US housing markets, and a more recent (and just as ridiculous) sell-off after its Nov.2nd earnings announcement investors have the ability to purchase the pre-eminent wealth creation company in the market today for a significant discount to its intrinsic value.

Much like BRK or LUK, BAM is difficult to quickly summarize or catagorize. Their basic strategy is to opportunistically acquire and manage long lived assets, at reasonable prices, and manage them actively to maximize total returns. Asset classes include commercial and residential property, financial assets, power generation and transmission, timberlands, and renewable energy.

Considering the recent price of roughly 11x run rate free cash flow (half the multiple of asset managers of similar nature), which I believe is an absurdly low price considering their growth, cash flows, returns on equity, stable and high quality asset base, and inherent inflation and recession resiliency BAM represents an amazing opportunity at today's prices.

unique position in asset management

I have owned this stock for quite awhile and have not been disappointed
Long term track record.
In good solid businesses (office real estate, power production, etc) that are growing at good solid rates

excellent value-oriented management--invested in diverse office properties, renewable resources (hydroelectric power) and asset management

knows how to make money using wind, water, trees, or real estate

Great positioning in sustainable energy sector. Plus long term revenue generating activities.

One of the steadiest stocks you an buy with holdings in hydroelectric power and commercial real estate

BAM currently trades at a 25-35% discount to estimated NAV of $35-40 per share. That NAV includes (1) roughly an implied 6.5% capitalization rate on commercial properties, (2) a 15x cash flow multiple on hydroelectric generation assets, and (3) a 12x multiple on net fee income. BAM is very adept at deep value and cash flow oriented investing. Historically, BAM has thrived in times of economic uncertainty, poor credit quality and less frenetic M&A markets. These factors combined with BAM’s relatively unique corporate structure potentially favor the company’s ability to continue a strong pace of growth.

Well managed with a great portfolio of underappreciated assets.

Bam is great for many reasons:

1. it's involved in high quality long life assets, that produce free cash flows ( Infustructure, asset managment, comercial real estate.)

2. The company has a great CEO who is value and investor conscience ( Bruce Flatt)

3. Bam ownes many investments outside the U.S. ( it's actually a Canadian company) and it invests all over the world, which should help invesors interms of currency exchanges, and of course high growth rates.

similiar to buffets early days, growth potential

This company is like a junior version of Berkshire Hathaway. They grow in what they know, and improve the business models of the purchased companies.