Monday, October 19, 2009

Brookfield Asset Management 2

I am reviewing this stock (TSX-BAM.A) today as I last reviewed it on my blog in November 2008 and since I have updated my spreadsheet with the December 2008 financials. I have also updated my spreadsheet with the 2nd quarterly financials. I do not own this stock. This company is on the dividend list of Dividend Achievers . (Note the new address for Dividend Achievers list.)

First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. In 1987, it was paying dividends and I did receive some good dividend income from the company. The company started to have problems in 1989 and I am glad a sold when I did.

The first thing I want to review is Insider Buying and Insider Selling. There was a bit of buying at the end of last year, however, since that time there has been a huge amount of selling. There was a lot of selling in August of this year, mostly by a director. Of course, you never know why anyone sells, but you have to wonder.

Sites that use the last 12 months of earnings to do a current P/E ratio show a P/E ratio in the low 20’s. My P/E for the current price and expected earnings for this year is 27. The 5 year average low P/E for this stock is 13. However, the P/E has fluctuated a lot, so it is hard to pin down a low P/E ratio for this stock. However, any over 15 is probably high, so it would appear the P/E ratio on this stock is not showing as a good time to buy. If you look at the Graham Price, the stock price seems to be almost 40% higher. Also, for the Price/Book Value ratio, the current ratio is higher than the 10 year average. The only buy signal is the Dividend Yield. The current dividend yield is 2.3% and the 5 year average is 1.7%.

I note that the Globe Investor site gives this company 3 stars out of a possible 5 star rating. There are a lot of analysts that follow this company, both in Canada and US. It is traded on the NYSE as BAM. All the ratings are from Strong Buy to Hold. I can find no other ratings. The consensus recommendation is a Buy. (See my site for information on analyst ratings.)

In looking at the charts, I compared this company to the TSX and the Real Estate Index. This stock has, over the past 10 years done consistently better than the Real Estate Index. It has just done much better than the TSX if you look at data for at least 10 years. This company spiked higher than both these indexes in the last bull market, but fell in the subsequent bear market to match the return of the TSX index. It has, over the very short term done a bit better than the TSX. The dividend payments have added around 3% to the total return for this stock over the last 5 and 10 years.

I am currently satisfied with what real estate stock I have, so I am not in the market to purchase any such companies at the present time. However, I will track this company as it is on a dividend list I like.

This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets.

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