The Brookfield Empire Strikes Back

If Berkshire Hathaway (NYSE: BRK-A  ) helmsman Warren Buffett is correct in calling the economic crisis a war, then the Brookfield companies are on the front lines and battling bravely.

Brookfield Asset Management (NYSE: BAM  ) is taking no prisoners in its bid to repel the ongoing economic upheaval with the force of a diversified company of soldiers. Within the empire's forces is a brigade of specialized subsidiaries targeting assets from real estate to infrastructure, and to date even those operating in the most heavily besieged sectors have distinguished themselves.

On the heels of their collective success, Brookfield Asset Management recorded net earnings of $147 million in the second quarter for a 34% gain over the same quarter last year. Cash flow from operations totaled $276 million, with surprising strength in commercial real estate offsetting a 79% year-over-year decline in operating profits from specialty funds.

The surprising heroes
Reinforcements of optimism have propelled many real estate stocks to substantial recoveries during recent months, and Brookfield Homes (NYSE: BHS  ) shares have more than doubled just during the past month.

While I have urged Fools to remain extremely cautious of this rally, warning of sustained challenges for the likes of Pulte Homes (NYSE: PHM  ) and wallboard manufacturer USG (NYSE: USG  ) , Brookfield Homes climbed back into the black with attributable net income of $200,000. The company reported a 12% increase in net new orders from the prior-year period, and a reduction in order cancellations.

I continue to view residential real estate as a heavily impaired sector, but appreciate the resiliency of an effective operator as it charges across the battlefield.

Meanwhile, with the investment community bracing for substantial weakness in the commercial real estate sector -- stemming both from constrained credit conditions and persistent economic malaise -- Brookfield Properties (NYSE: BPO  ) fights back with a 95% occupancy rate that highlights the exceptional quality of the property portfolio. Brookfield Properties accordingly increased net income by 33%, to $60 million.

A future three-star general
I have previously featured Brookfield Infrastructure Partners (NYSE: BIP  ) as an enticing choice for exposure to Brookfield's asset-management expertise within the more defensive infrastructure sector. As it turns out, the carryover of weak housing conditions into the timberlands segment has impeded BIP's trajectory, leading shares to underperform their Brookfield brethren so far this year. Still, BIP came through in the second quarter with a 44% increase in adjusted net operating income for the transmission segment and totaled $76 million in ANOI overall.

Even as Brookfield's real estate soldiers distinguish themselves in battle, I believe the infrastructure subsidiary possesses more effective armaments for the battles to come.

Further Foolishness:

Berkshire Hathaway is a Motley Fool Stock Advisor pick. Brookfield Infrastructure Partners L.P, Berkshire Hathaway, and USG are Motley Fool Inside Value selections. Brookfield Asset Management is a Motley Fool Global Gains pick. Brookfield Infrastructure Partners L.P is a Motley Fool Hidden Gems recommendation. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns no shares in the companies mentioned. The Motley Fool's disclosure policy thinks that you're its greatest asset.


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