Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is the holy grail of value stocks. With a rock-bottom P/E ratio (8.05 at the time of this writing), excellent profitability metrics, and a portfolio of wholly owned subsidiaries that would be the envy of any private equity firm, Berkshire is poised to deliver value for the foreseeable future.
But what really cements Berkshire as a legend in the value investing world is not the business, but its CEO. Warren Buffett is by far the most famous value investor of all time and easily one of the most renowned investors, period. If you’re willing to venture into NYSE-listed stocks, you can capture a slice of Buffett’s investment pie by picking up Berkshire Hathaway class B shares for approximately $200 each. But if you prefer to keep your investments domestic, there’s a Canadian stock that has some of the same features that make Berkshire Hathaway a value investor’s dream.
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM)
Brookfield Asset Management mainly in utilities, real estate, and infrastructure assets. Like Berkshire Hathaway, it places emphasis on making long-term investments that deliver considerable value. Also like Berkshire Hathaway — especially in its early days — Brookfield has a penchant for buying distressed assets on the cheap. Brookfield has over $300 billion in assets under management, making it one of the largest asset management companies in Canada.
The biggest similarity between Berkshire and Brookfield is their investment strategies. Both of these companies focus on investing in companies that will generate long-term value — preferably at discount prices. Brookfield’s emphasis on value is arguably stronger than Berkshire’s, as Buffett, through the influence of his partner Charlie Munger, has evolved to an approach the weighs the quality of the business above price. However, Brookfield’s emphasis on distressed assets is similar to Berkshire in its early days; it also resembles the life-changing investment that resulted in Buffett taking control of Berkshire in the first place.
The biggest difference between Berkshire and Brookfield is the fact that Brookfield is a fund manager. If you want to invest with Brookfield Asset Management, you don’t necessarily need to buy the stock; you can also buy into any of the mutual funds the company has on offer. This may be a good idea for some value investors, since the company’s forward P/E ratio (30) and price-to-book ratio (2.33) are a little high at the moment.
In the strict sense, there will never be another company like Berkshire Hathaway. Berkshire’s investing philosophy and practice of buying out entire companies give it a unique portfolio that’s not quite like any other publicly traded firm. But with an approach firmly grounded in the value investing tradition, it does share similarities with other like-minded companies. As Brookfield Asset Management says on its website, its approach is firmly “value-driven.” The company’s many investments over the years show that its walk matches its talk. If you’re looking for a Berkshire-lookalike on the TSX, this might just be it.