What happened
Shares of Brookfield Asset Management (BAM 4.39%) gained 50.7% last year, according to data provided by S&P Global Market Intelligence. That beat the S&P 500 index return of 28.9%.
Brookfield continued to execute its basic strategy: Attract capital from institutional investors, and invest that capital at satisfactory rates of return for its own investors.
One of the highlights of the year was the acquisition of Oaktree Capital Group. Brookfield bought 62% of Oaktree for $4.7 billion, funded half with cash and the rest with Brookfield stock. Brookfield Asset Management now has $510 billion of assets under management and $2.8 billion in annuallized fee-related revenue, as of the third quarter.
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So what
The addition of Oaktree expands Brookfield's offerings from infrastructure, energy, and real estate assets to include a premier credit offering. This enables the combined company to offer returns to clients through all market cycles.
Brookfield reported strong results through the third quarter. Funds from operations were $4.3 billion over the trailing-12-month period. Fee-related earnings -- one of Brookfield's key measures of value creation -- before performance fees increased by 26% over the last year. The company's listed investment partnerships reported combined growth in funds from operations of 13% over the trailing 12 months through the third quarter.
Now what
Brookfield reported strong returns on invested capital across most of its businesses. The Oaktree acquisition added $102 billion of fee-bearing capital. Other third-party capital raised over the last year totaled $28 billion.
Additionally, the company invested $33 billion of capital in its listed partnerships over the last year, which should drive even more growth.
The future looks bright. Management believes that Brookfield will continue to benefit from low interest rates, causing even more investment flows from institutional investors that are seeking the higher returns available in alternative assets. That should lead to continued growth in cash available for reinvestment or distribution to BAM shareholders.
