It is true that BN has multiple corporate entities, but the purpose is to create a menu of investment themes so that investors could pick and choose appropriate strategies such as renewable energy, asset management, private equity, etc. Spin-offs are also one of the key tools BN uses to unlock shareholder value. In terms of accounting, not only BN but the whole asset management industry has a difficult time presenting investors through traditional GAAP accounting due to things such as the timing of carried interest, operating results of consolidated subsidiaries, etc. which may distort the economic reality of the underlying business. They do use Non-GAAP accounting, but investors also need to clarify what metrics they are using. For example, BN calculates net asset value (a proxy for book value per share) or distributable earnings (a proxy for free cash flow), which we think provides investors with a better picture of the business. We are usually more concerned with metrics such as “Adjusted EBITDA”. BN has a track record of capital allocation, and value creation over decades, Bruce Flatt is one of the best CEOs in the industry, who always has a long-term view and historically invested counter-cyclically during any downturn. Going forward we expect BN to compound net asset value per share around 15% annualized (recent Investor Day guidance from management). Sometimes the best investment insight is qualitative not purely quantitative, similar to investors who bought BRK.B because of Warren Buffet. The Brookfield Group goes through periods of love and hate with investors. But over 25 years the group has delivered a lot of shareholder value and has been one of the best compounders.
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