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Brookfield Asset Management Inc. Message Board

  • chad_work2001 chad_work2001 Jul 26, 2007 10:51 AM Flag

    Pilot on the Plane and Knowing vs Hoping

    If you believe that this is a good company to invest in, based on research and not baseless faith/hope, then this drop is a buying opportunity you should love.

    About 95% of all "investors" (Wallstreet's sheeple) react to stupid news and will react with emotion. So if this is a reaction to stupid news and emotion - an overreaction - what's the problem?

    Either this is a good company and this is a baseless emotional reaction, and this is a buying opportunity, or BAM is overvalued and coming back to reality in price, and fear of this drop is a sign that perhaps you bought at the wrong price or don't really know anything about this company. Not saying anyone specific has, but I think anyone who buys based on what "Jim Cramer says" and that's it, isn't an investor, but a gambler.

    BAM's stability of earnings growth for the past 6 years is not that good - about 30% stable. If it were 100% stable, that would mean it grows consistently every year by the same amount giving you good predictability of future earnings. Stability of sales growth is only about 56%.

    I think BAM should return about 24% per year over the next 5 years with dividends re-invested, using a conservative P/E at the end of that time of 15 and a conservative annual growth rate of 34% which they've had over the last thee years. If you think those numbers for the future 5 years are too low, then perhaps you think the return will be higher than what I think.

    The stock splits they've had over the last 5 years really were nice for early investors. Perhaps that will continue as well. Perhaps not.

    If you look at the stock chart over the last 5 years, with the stock splits, it's amazing - a nice, nearly 45 degree uphill climb. But that is a picture of the past.

    The real estate bubble built from the money from the stock market bubble deflation is now deflating itself. Now we'll see how well BAM does. If they do well in tough times, perhaps they have good management. Perhaps all of the mindless valuations of the real estate market - the bubble - weren't a part of BAM's business practices as well, and they'll do just fine. I'd personally like to see them increase the stability of their earnings and sales growth.

    The only thing that matters when you boil everything down is how much money will they make with your money you lent them, for which they pay you 1.3% in dividends? That's what all the figures and news are supposed to tell you.

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