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  5. BN: I have see. [Brookfield Corporation Class A Limited Voting Shares]
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Investment Q&A

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Q: I have see. Reports from TD and elsewhere about how extremely discounted BN is. For example “ BN's 75% stake in BAM alone represents ~80% of BN's market cap. The market value of BN's stakes in BEP and BIP (~$17bln combined) more than offsets corporate leverage of ~$16bln, which implies that the market is assigning less than zero value to: 1) BN's stake in BBU (~$2bln); 2) the real-estate portfolio; 3) the insurance business; and/or 4) carried interest.”

How is this company not a “table pounding buy” at these levels given management’s record and current price.
Asked by James on May 15, 2023
5i Research Answer:

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.