BN’s share price has been under pressure recently due to concern that high interest rates would affect BN’s ability to raise funds and grow, as well as its exposure to commercial real estate. Also, the majority of BN assets focus on real assets (real estate, infrastructures, energy, etc.) which are interest rate sensitive.
We like the management team, especially CEO Bruce Flatt who has a track record of value creation and investing counter-cyclically in the downturns. Going forward we expect BN to compound net asset value per share around 15% annualized. We think investors need more patience for the thesis to play out. We don’t think investors should try to time the bottom in stock price, instead a more cautious approach would be to average into the positions over time.
We like the name, we think BN could experience a strong recovery as interest rates peak. Currently, it is very cheap at 11X earnings. We have other additional comments posted today as well here.