Buying More Brookfield Corporation $BN

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Every two weeks, I’m adding $500 to the portfolio. On May 25th, I’ll use this week’s contributions to buy more ownership of Brookfield Corporation.

Brookfield Corporation Background

I view investing in Brookfield Corporation as an opportunity to benefit from the capital allocation skills of a very talented and proven executive team that has an exceptional track record of building business segments that prove to be cash flow monsters.

Here are a few slides from Brookfield’s 2022 Investor Day. The nearly three-hour presentation does a great job of laying out Brookfield’s history and management’s strategy for the future.

So, over the last 20 years, management set out with a goal of providing shareholders 15%+ annual returns. From 2002 to 2022 they grew AUM from $3B to $750B leading to distributable earnings (DE) growing from $0.4B to $4.9B which generated $30B of cash flow that they reinvested back into the business.

As you’ll see in the slides below, management compounded BN’s capital by 16% over the last 20 years, added an additional 2% in annual dividends for shareholders and benefitted from P/E multiple expansion which led to a 19% annualized return for shareholders.

This turned a $10,000 initial investment for a common shareholder into $250,000 if an investor held from 2002 - 2022 and reinvested dividends. Not bad.

Brookfield Investor Day 2022

This is an important time to say that past performance does not guarantee future success. But management has openly stated that their goal is to provide 15%+ returns for shareholders over the long-term (same goal as 20 years ago) and I believe they have the credibility to deliver on that.

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Brookfield Corporation has three key areas of investment: Asset Management, Insurance Solutions, and Capital. I’m optimistic about the future of all three of them, but I think the market is currently discounting the value of BN because of fears around its $60B Capital segment, which includes $35B of real estate assets.