Q: Looking at re-allocating funds from oil sector in either BAM or LMN. Currently have a 3% holding in BN. This would be inside an RRSP with a goal leaving alone for 20 years. What would your preference be. Allocation would be 1.5%.
5i Research Answer:
We can't get personal but will offer these comments: BAM is much much larger than LMN; BN owns 75% of BAM, so if an investor owns BN they get indirect BAM exposure. LMN likely will have faster growth, both because of its business but also because it is smaller (much) and plans an aggressive acquisition strategy. BAM, meanwhile, plans to pay out most of its cash flow as dividends. If one is looking for growth, we would side with LMN, if one is comfortable with small caps and the sector. Note, this is not to disparage BAM, we think it is quite fine on its own.