Canadian Money Forum banner

Brookfield Asset Management (BAM.A)

48K views 116 replies 42 participants last post by  Money172375 
#1 ·
I've been watching this chart and over the past three days there has been a strong rally, hence the 3 white soldiers pattern, I'm wondering if anyone wants to jump on this with me?
 
#2 ·
I have been long BAM and BIP.UN (Brookfield Infrastructure Partners) since this past summer. Both are Canadian dividend paying companies but BIP is actually headquarterd in Bermuda to avoid dividend withholding taxes. BIP is meant to be a high yield stock with some potential for dividend growth and capital appreciation and focuses on massive infrastructure projects with monopoly potential in their local markets. BAM is kind of a holding company for all the various Brookfield operating companies and has a decent sized stake in all their ventures and thus is a diversified company engaging in multiple businesses in real estate and infrastructure that has a small dividend with a very low payout ratio but more potential for growth and capital appreciation.

These are high quality, dividend growth companies with only a moderate amount of leverage. They are all managed by Bruce Flett who has done an amazing job turning this company around starting around the turn of the millenium. When the Great Recession hit they were in great fiscal shape and made a bunch of acquisitions whose full impact won't be fully realized until the Great Deleveraging is further advanced.

I'm a big fan of both.
 
#3 ·
One of the first stocks I owned was these guys, but it was under a different name, back when the Bronfman brothers ran the various holdings.
The story here is actually probably the main reason why I got out of stocks and into mutual funds.(dipping my toe back in the water again now, but with more knowledge as well as free time)

Back then what really disturbed me was what I didn't understand, you see, they were constantly changing shape with 51% ownerships of 51% ownerships and so on, and so on, and changing control of controlling shares (at least that's the way it looked to me at the time)

Just recently I looked into BPO, and saw that they still seem to be up to their old tricks (only then did it click who they were and googled it), so since I don't really get what they're up to, I had to give them a pass, not saying they aren't worth investing in by any means, it's just that the complex lawyery structures they seem to have are beyond my ability to trust, I like stuff that seems reasonably simple, and centrally owned, like Riocan, just my two cents.
 
#5 ·
I've been following this one for quite some time. A couple of things have been holding me back from purchasing: low dividend payout and net insider-selling.

P/B and other fundamentals look attractive. Probably the type of stock I would buy in a major market sell-off.
 
#7 ·
BAM.A just keeps running and running

Model Price™ is 34.03 ~50% lower than the current price.

If I owned a full allotment, I'd be taking profits.
As it is, I'm waiting for a pullback to add more.

This graphic taken from ModelPrice Guy on Facebook.

 
#9 ·
@MOA

Brookfield pays dividend in USD, so an exchange takes place for the dividend to arrive in CAD.
If I'm not mistaken, the exchange takes place at Brookfield, not at the brokerage.
All very confusing.

Please note that the quarterly dividend payable on Brookfield's Class A Limited Voting Shares is declared in US dollars. Registered shareholders who are U.S. residents receive their dividends in U.S. dollars, unless they request the Cdn. dollar equivalent. Registered shareholders who are Canadian residents receive their dividends in the Cdn. dollar equivalent, unless they request to receive dividends in U.S. dollars. The Canadian dollar equivalent of the quarterly dividend is based on the Bank of Canada noon exchange rate on the record date or, if this falls on a weekend or holiday, on the following business day.
http://www.brookfield.com/content/stock_and_dividend_info/common_shares-26718.html
 
#14 ·
"nearly all brokers offer the opportunity to hold a US dividend-paying canadian stock in US account or on US side of a dual-currency account. But it is always the client who must initiate any journal that has to be done."

I think you are correct.

I'm going to do some more research until I pull the trigger. I want to get into BAM.A after the split.
 
#15 ·
advisor could you do me a favour? do you have a handy thumbnail summary of the re-orgs that BAM did to its numerous sub-stocks recently?

brookfield has RE - mostly office buildings? - all over the US & also in south america i believe.

put another way, which is the biggest, baddest bamass mother of them all these days?

as for the dividends, sometimes it's not possible to do any "research" because nobody knows anything for sure. Sometimes one just has to buy the stock & analyze the dividend from scratch, in order to find out who is doing what with it, all along its route from the corporate treasury to your account.
 
#18 ·
So expensive. With a 6% increase, the 1.2% yield becomes 1.27%? I know the P/E looks tempting, but it trades at 22 times cash flow with a 5% year over year increase. It's not cheap. Very high quality assets, but not cheap. In 2007-08, they fell from $47 to $15, so don't think it's a safe haven. The stock has doubled in a couple years with maybe 10% underlying growth.
 
#19 ·
With a 6% increase, the 1.2% yield becomes 1.27%?
"As a result of the three-for-two stock split, Brookfield will adjust its dividend policy to reflect the additional number of common shares that will be outstanding. Subject to Board determination, the company expects to commence paying a quarterly dividend of US$0.12 per share (representing US$0.48 per annum, or US$0.72 per annum based on the pre-split number of shares outstanding) beginning on June 30, 2015. This would represent an increase of approximately 6% over the current quarterly dividend rate, on a split-adjusted basis."

Yield of 1.27% is about right based on today's close.
 
#23 ·
as i mentioned upthread, FX fees on USD dividends from canadian companies are a complicated picture across hundreds of brokers, there are all kinds of micro-exceptions, brookfield itself is a special exception.

zylon should identify whether he is talking about a registered or non-registered account. Just this distinction makes a big difference. During the past 2 years there have been massive changes in broker practices regarding registered accounts. These have been encouraged, one might almost say enforced, by the IIROC, since brokers are acting as trustees for registered accounts & fiduciary duty binds them to fair dealing.

however, although brokers have cleaned up most of their registered account FX fees over the past 2 years, the same is not happening in non-registered accounts, where brokers have a lowered responsibility as trustees.

in addition, zylon should identify the broker involved with his account, particularly if it's a non-registered account, since individual broker practice may be part of the story, as i mentioned upthread.

if non-registered, we now travel into territory that splits hairs into nano-particles. I could write a book on the subject but it would be useless, this world is changing so fast that a book would be out of date in 6 months.

a feature of non-registered accounts is how each broker records settlement currencies. Some don't record at all. Settlement data may or may not have an effect on whether a broker charges FX fees; this depends upon each broker's profile.

furthermore, among the 21 canadian companies paying dividends in USD, brookfield is already an exception, also as i mentioned upthread.

in general, though, it's true today that brokers are charging FX fees on millions of USD dividends paid by 21 important canadian companies to hundreds of thousands of unsuspecting canadian investors who hold these stocks in canadian dollar investment accounts.

it's also true that the broker industry is being pushed by the IIROC - which in turn has been pushed by a few journalists exposing the damage & by a few investors who have complained - the broker industry is beginning to consider how to improve the situation(s) in the clients' favour.

anecdote suggests to me that scotia iTrade may be a leading broker in this regard. (Q1 to zylon, Is your broker scotia iTrade? this would explain the fair deal you're getting. Q2 to zylon, is your account, at any broker wheresoever, a registered account? this would also explain the fair deal.)

within a few years, there will likely be much greater transparency. The fact that more & more companies will be converting to USD dividends will help to push the broker industry towards full & fair disclosure. Although this will only happen if more & more investors inquire specifically about FX fees on their dividends.

(aside to advisor) please do not try to summarize an extraordinarily messy, fragmented & unwieldy situation into one or 2 overly-simplified generalities in order to write up some kind of snap rule. This is a giant issue that is only now being probed for the first time. In my view, it's fine for a cmf poster to help with the probing (zylon's expose) but it's misleading for any cmf poster to publish snap rules based on one non-typical fragment of information.
 
#22 ·
This is a very boring investment. But the value of shares I bought in 2009 tripled, in 2012 doubled. Here is a link to a very interesting article showing how they operate. I like it.
http://www.canadianbusiness.com/business-strategy/brookfield-asset-management-a-perfect-predator/
The dividend is small, this is true.

I also got some Brookfield Infrastructure Partners UN in my registered account. They also pay small dividend, split into several components: return of capital, interest, US interest, foreign dividend and US dividend.

On the other hand, thanks to owning exciting and large-dividend paying Yellow Pages I now have a capital loss I will carry well into the future. So boring is good.
 
#26 ·
Thinking to start a position in my RRSP, I knew that they pay dividends in USD, but just double-checked on their website - and apparently "Registered shareholders who are Canadian residents receive their dividends in the Cdn. dollar equivalent, unless they request to receive dividends in U.S. dollars."

I know the dividend is tiny, but still - a question if I may to those who hold the stock: do you receive dividends in CAD or USD? If the latter - did you have to request it (and how if yes)?

I'm with Questrade, a dual currency account.

Thank you in advance! :)
 
#27 ·
Thinking to start a position in my RRSP, I knew that they pay dividends in USD, but just double-checked on their website - and apparently "Registered shareholders who are Canadian residents receive their dividends in the Cdn. dollar equivalent, unless they request to receive dividends in U.S. dollars."

I know the dividend is tiny, but still - a question if I may to those who hold the stock: do you receive dividends in CAD or USD? If the latter - did you have to request it (and how if yes)?

I'm with Questrade, a dual currency account

you'll note that the company is specifying "registered shareholders."

no company can control how brokers handle dividends for shares that are held in street. These days, nearly all shares are held at brokers in street form. Certainly RRSP shares in particular are always held by a broker as trustee, never by the beneficiary in registered form.

street holding means that brokers have most of the control over dividends, although investors who understand what's happening can intervene & request that a canadian company that pays its dividends in USD be held on US side of an account in order to prevent broker FX charges.

here's a nano-detail that moneyToo would be a good person to investigate (ie she's bright, accurate & reliable :peach:)

a year or 2 ago a friend set up an RRSP at questrade precisely so he could monitor what they're doing with USD dividends. In this account, he bought Potash as an experiment - POT is a canadian that pays a relatively high dividend in USD. After settlement, he asked questrade to journal the stock to USD side of the registered account, so he could receive POT dividends in USD with no FX fee.

what happened next was interesting. Keep in mind that the "settlement currency" was CAD, in this example. He'd paid in CAD. He found that questrade's system kept migrating his shares from the USD side of account, back to the CAD side. Each day that this happened, the questrade representatives would say they couldn't explain why. They'd journal the potash shares back to USD side, but then overnight the same migration back to CAD side would occur again.

i do know from experience that other broker systems are able to handle the "settlement currency" issue on a permanent basis. IE investor buys a canadian stock paying USD dividends on canadian market, investor pays in CAD, then investor journals stock to USD side & the stock will stick there permanently.

but the questrade mainframe, as is well-known, was custom-built upon an older model. My friend speculated to me that the undesirable migration of his potash shares back to their original settlement currency - despite his continued efforts to keep them on USD side - kept re-occurring because of a small glitch between the older questrade mainframe & the newer one that's presently being used.

i don't have any update on this year-old story. It's possible questrade has been able to cure the problem. It's possible that canadian stocks such as Brookfield can now be bought in CAD, then journalled to USD side of an RRSP where they will remain. Certainly this manoeuvre will work at brokers TDDI & BMO.

moneyToo - if you've been patient enough to read this far - might you be charged with a mandate to update this story? what will happen if you buy Brookfield, which definitely has a USD dividend, in CAD, then ask to journal/hold this stock on USD side of the account in order to shelter the USD dividend from FX fees?

another possibility - which might happen to you - is that questrade will convert Brookfield's USD dividend to CAD at favourable spot or bank of canada rates. This would also be an acceptable solution to the problem. Alternatively, they might convert a USD dividend to CAD at a rate that includes a punishing FX fee. If this happens, it will take perseverance on your part to identify whether a CAD dividend payment for Brookfield does or does not contain an FX fee.
 
#30 ·
I am with Questrade and originally bought POT in C$. After learning about the currency skimming for forex I journaled over to POT in US$. Every divvy since has been paid in US$ and the shares have never reverted. Just another example of how CMF has increased my returns because of the wisdom and advocacy of some great members.

Cheers
 
#31 · (Edited)
I am with Questrade and originally bought POT in C$. After learning about the currency skimming for forex I journaled over to POT in US$.
Maybe I'm blind, but I went trough my account activity - and don't see any currency skimming. Last dividend for example:

May 4, 2015

FX rate: $1.00 USD = $1.2092 CAD

Dividend reinvestment REI
POTASH CORP OF SASKATCHEWAN INC CANADIAN LISTED REINV@U$32.60 REC 04/13/15 PAY 05/04/15

It DRIPed 1 share for $39.42 CAD which is exactly $32.60 x 1.2092. Market price of POT on that day in CAD was $39.37 (in 'Balances and Positions"), but, as we know, stock prices fluctuate, so I wouldn't blame Questrade for not buying a share for 5 cents cheaper at the closing price :)

Dividend itself also looks kosher, but is a bit off: 46.08 vs. 46.33 (it was paid on May 5th when FX Rate was lower, 1.2072)

Upd. Now I see it lol If they charge 0.5% for conversion, then it adds up: 101 shares x 0.38 USD = 38.38 x 1.2072 = 46.33 - 0.5% = 46.09. But the same formula doesn't work for any of the three previous dividends (received vs expected: 43.86 vs 43.92, 39.33 vs 40.33, 37.52 vs 38.24)

Anyways, sorry for derailing the thread - I'll check the next POT dividend on July 31st (and hopefully my BAM.A order will get executed before then :))
 
#33 ·
I can continue to attest that Scotia iTrade is still converting dividends in CAD RRSP A/Cs at BOC rates as of the dividend payment date.
Not sure about non-registered accounts.

Questrade is converting CAD to USD using BOC closing rate + 1.99% markup.
I have verified this a couple of times recently and their conversion was accurate right down to the cent.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top