Brookfield Corporation (BN 4.07%), Blackstone, and Apollo Global Management are alternative investment asset managers. All three have outperformed the S&P 500 over the past five years. During this time, Brookfield has gained by 106.6%, Blackstone delivered returns of just 85%, and Apollo soared with a 143% return since 2021.
NYSE: BN
Key Data Points
However, looking ahead, Brookfield appears primed to deliver superior annualized returns -- and three unique attributes may prove key to its performance.
Image source: Getty Images.
1. Brookfield is more than just an asset manager
Brookfield Corporation owns 73% of Brookfield Asset Management (BAM 3.83%), or BAM for short, a separate entity that encompasses its asset management business. However, this is not Brookfield Corporation's only operating subsidiary.
The company also owns Brookfield Wealth Solutions (BNT 3.36%), a Bermuda-based insurance company. Publicly traded, this entity has a complex ownership structure. Brookfield Corporation owns 100% of the equity, with the publicly traded Class A shares fully convertible into regular Brookfield Corporation shares .
Brookfield also directly owns 100% of Brookfield Property Group, along with interests in several publicly traded investment entities, each managed by BAM:
| Entity | Industry | Ownership Percentage | Market Cap | Value of Brookfield's Position |
|---|---|---|---|---|
| Brookfield Infrastructure Partners | Infrastructure | 26% | $18 billion | $4.7 billion |
| Brookfield Renewable Partners | Renewable Energy | 46% | $20.5 billion | $9.4 billion |
| Brookfield Business Partners | Private Equity | 68% | $3 billion | $2 billion |
Source: Brookfield Corporation
2. Brookfield's trades at a big discount to its underlying value
The total value of Brookfield's publicly traded investments is $16.1 billion. The current value of its BAM stake is around $62 billion. Together, these interests are worth $78.1 billion, or around $34.86 per share, representing around 72.6% of its current share price of around $48 per share.
That's not all. Last year, management assessed the fair value of Brookfield Wealth Solutions, its private fund and real estate investments, plus the net present value of its direct carried interest in BAM-managed funds, at $98 billion. That's around $43.30 per share, based on the common stock outstanding.
In short, Brookfield may have a breakup value of around $78 per share. Admittedly, much of this value, namely the carried interest, is going to take years to realize. However, Brookfield's underlying value appears poised to compound further.
3. Management anticipates that Brookfield's intrinsic value will hit $140 per share by 2030
Brookfield's management anticipates that, based on forecast distributable earnings growth averaging 25% between now and 2030, the company's intrinsic value could hit $140 per share that same year . That's nearly three times Brookfield's current trading price.
Even if the valuation discount persists or only partially closes, this could still pave the way for annualized returns in the 15%-20% range. Such returns are in line with Brookfield's historical performance. Although future forecasts aren't guarantees, consider also Brookfield's exposure to numerous growth trends.
These include the artificial intelligence (AI) infrastructure buildout trend, as well as recent regulatory changes that open the door for retirement vehicles like 401(k)s to invest directly in alternative assets.
Brookfield is currently pulling back in price, but considering its underlying value and long-term potential, now may be the time to start accumulating a position.
