No. of Recommendations: 10
For myself, I've enjoyed prime beef for 3 1/2 decades now. So I have no particular interest in hamburger or flank steak, or whatever the market might be serving up at better prices. But still of a similar nature. What would be alternates?
No question Berkshire is in a class of its own. The appeal of Fairfax today is it's available at a much lower multiple to book value with accelerating earnings from a fixed income portfolio benefiting from higher rates. So it might provide a one-time gain from multiple expansion. Of course, you have to decide if Mr. Watsa's idiosyncratic style is right for you.
I do find myself continuing to look at BAM . . . Why I bring this up is that I see BAM as a different dish, but one that has its own attributes. Toll gates have their own attractions if they're located on well traveled roads.
Not sure if you're referring to the old BAM or the new BAM. The old one, which is now BN, used to advertise itself as a toll booth collecting predictable contracted revenues from things like office towers, shopping malls, hydroelectric power plants and various infrastructure assets, including actual toll roads. More recently, the fees it collects from investing other people's money in such things have dwarfed the other income streams.
The new BAM is a pure play on those asset management fees, with a yield approaching 4% after its recent dividend hike. BN now presides over a sprawling empire of nine publicly-traded subsidiaries focused on infrastructure, renewable power, private equity and a nascent insurance business, along with a large commercial real estate portfolio, so there's a lot to keep up with.
Brookfield was an early player in alternative asset investments, but all the big private equity houses have joined in, so there are now plenty of flavors to choose from in that space. Blackstone, KKR, Apollo, Ares, Carlyle and the new Blue Owl all offer their own variations on the theme. Several of them have leaned into the burgeoning field of private credit and have been richly rewarded by Mr. Market during the current rally. BN management calculates an intrinsic value far above its market quote, but this difference has persisted for years.
