How is this company not a “table pounding buy” at these levels given management’s record and current price.
It is correct that BN is trading at a discount to the sum-of-the-parts valuation. BN is also run by one of the best CEOs, with an impressive track record - Bruce Flatt, and management expects to compound net asset value per share by around 15% annualized going forward. Having said that, the discount here is structural, usually referred to as “conglomerate discount”, which has been the case for a while, and management is active in narrowing down that discount by spinning out BAM – one of the jewels of the company. Overall, we agree that BN’s valuation is quite cheap when considering its individual holdings and its cash-generating capability. It also has a massive amount of available capital, to make deals if we see a recession. We think it is buyable. Investors take a short-term approach, but the company takes a 'generational' approach. But the stock is up 5-fold in 11 years, not even including the value of all its spin outs: management knows what it is doing to create value.