The Financial Times this week published an article about Brookfield Corporation questioning how much money it really makes due to its “opacity.”
I would be most interested in your take on the reporting. https://www.ft.com/content/6e070b14-74cc-4ade-bd80-7bd3900c6a82
Thanks very much. Michael
The issues are nothing new, and investors have fretted about the group's accounting for some time. It is not conservative accounting, but the structure of the group means money can be raised at subsidiaries, with the parent participating and benefiting from the rise in the equity of its subs. The structure also results in lower tax rates for many of the companies in the group. Whenever we see concerns on accounting, we look at cash flow. Cash flow is essentially much harder to manipulate than earnings. Cash flow from operations has gone from $4B in 2017 to $11.2B last year. The proof is also in the very impressive long term stock performance of the company. If one includes all the splits and spin outs, investors returns over multi-decades have been stellar.