No. of Recommendations: 14
For those of us less familiar...what is the backstory to this guy and thread?Keith Dalrymple is a short seller (not that there's anything wrong with that) who began writing a series of substack posts about Brookfield in mid-2021. For those of us eager for deep dives by competent financial analysts, it seemed promising.
Unfortunately, his early posts were mostly rehashes of research done by others, most notably the Southern Investigative Reporting Foundation, which published results of its Brookfield investigation in 2013, highlighting the disproportionate control of Partners Limited and myriad related-party transactions among private funds, listed subs, etc. Dalrymple's posts also included lots of innuendo about Brookfield's past. The connection to the present-day company was sometimes hard to follow. You can still find them all on his substack if you'd like to form your own opinion.
SIRF has since morphed into the Foundation for Financial Journalism. You can find thorough coverage of its 2013 Brookfield report here . . .
https://ffj-online.org/2013/11/18/brookfields-look.... . . and here:
https://seekingalpha.com/article/1263461-the-paper...Dalrymple's various rehashes culminated in his announcement in September 2021 that he would launch a paid version of his Brookfield substack which would go for $350 per month. Paying subscribers would receive two posts per month containing his deepest, most original research. He also pledged to continue writing free posts on his Brookfield substack, which would offer less depth. Since his posts to that point had barely been worth the time it took to read them for those familiar with the source material, it seemed unlikely this ambitious pricing structure would be a hit in the marketplace.
And, indeed, that was the last post in the series until it suddenly sprang back to life with the recent "reboot."
A lot of good work has been done by short sellers in recent years, including those that broke open the scandal of fraudulent Chinese companies listed on U.S. exchanges and, more recently, the curious case of Carl Icahn's lavish dividend policy, but Dalrymple did not evince the objective fact-finding that generally characterizes such work. One of his last posts before the apparently ill-fated monetization strategy looked at 2020-21 numbers for Canary Wharf, the sprawling London mixed-use real estate development, and concluded revenues were insufficient to support the non-recourse mortgage debt. He neglected to mention that all the retail elements -- bars, restaurants, shopping centers, etc. -- had been closed and generating no revenue during all or most of the pandemic period those numbers covered.
I concluded that, like certain stock promoters or detractors with vested interests in certain outcomes, he was an unreliable narrator. With commercial office real estate now struggling in a way reminiscent of retail real estate back then, he apparently sees a new opportunity to use this low ebb as a basis for suggesting again that Brookfield is a house of cards.
The original SIRF research he rehashed two years ago was fact-based and credible and discussed at some length in various forums back when it came out. The related-party transaction stuff, in particular, remains valid today. If you're going to be a Brookfield shareholder, you have to figure out which entities tend to benefit, which do not, and invest only in those that do. It is only fair to mention that often it is hard to tell, and this opacity is part of the deal you accept when you elect to become or remain a Brookfield shareholder. The outsized influence of the Partners group seems a little less compelling today in view of all the tech companies where small groups of founders/owners have created stock class structures essentially awarding themselves voting control in perpetuity. That doesn't make it great, but Brookfield is hardly the lone ranger there. Indeed, the company contends that such concentrated ownership aligns the interests of partners and common shareholders.
As long as Dalrymple's posts remain free, I will read them, in case his research becomes more original and compelling than the first time around. In the present case, I would suggest that when he implies (for the second time) that Canary Wharf is about to collapse, it's a big place with a lot going on:
https://canarywharf.com/We have all seen the breathless media reports about defaults and tenant defections in the office market. When a stock analyst quotes a newspaper (the Guardian, in this case) about how bad the latest example is, that does not represent independent or in-depth research. As they say, do your own due diligence.
