In this video clip from "The Rank," recorded on Feb. 14, Motley Fool contributors Matthew Frankel, CFP®, Jason Hall, and Tyler Crowe discuss Brookfield Asset Management's (BN 2.13%) past success, why they think it's done so well, and what to watch for the future of the alternative investment manager.

 

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Jason Hall: Here's the key about Brookfield Asset Management. It's one of the largest alternative asset managers in the world, has almost, I think $700 billion in assets under management. A substantial amount of money, earns management fees and then performance fees on that, invests alongside investors in these funds. One of the things that has it really appealing to me right now is that management just announced in the latest earnings that they reported, they're going to explore the idea of spinning out its asset management business. It's going to spin that out, because what management is saying is that the way the market values these asset managers is the ones that are more asset-heavy where they actually have a lot of their owned investments, and they're an asset manager, is there between $30 billion of market cap upside, if they split them apart. That's like a 30%, 40% premium just by doing that one thing. This is a business that's been a market-crushing investment since it went public. I'm a huge fan of management. I think they do a wonderful job. It's really appealing right now because of that additional upside. There may not do anything or they're going to explore it. We'll see what happens, but I just think it's a really appealing business. There was one question, this is a corporation, Brookfield Asset Management is a corporation. There's no Schedule K-1, their dividend, it's regular 1099s. You don't have to worry about with Brookfield Asset Management any Schedule K-1 stuff.

Tyler Crowe: Six-hundred-twenty-six billion AUM.

Hall: Six twenty six. There you go. I thought it was more than that.

Frankel: Can you just briefly run through the relationship between Brookfield and all of the other Brookfield's. Did they own a big percentage of Brookfield Infrastructure?

Hall: They do. They have equity stakes, they're publicly traded partnerships, and they hold equity stakes and those entities, their point board positions, their leadership is people that came from Brookfield Asset Management come on as the executives to run it. They have that same Brookfield approach to capital allocation. But they have to have the same equity stakes that the rest of us do. A lot of shareholder alignment there.

Crowe: They also get a management fee rip, which is not the greatest in the world. But the performance of the partnerships have been so attractive that it's one of those things where it's a wart, but you can look over it for the performance.

Hall: It's been worth the price of admission.

Crowe: On the people, one of things I would always enjoyed was that Brookfield Asset Management bought Oaktree and so brought Howard Marks into theirs. Howard Marks has been one of, whenever Howard Marks does an interview he is a person you want to listen to.