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“Best Buys Now” Pick #1:
Brookfield Corporation (TSX:BN)
There’s a learning curve involved with all things Brookfield. That learning curve steepened a touch with the spinout of the asset management business back in December.
But once you’re comfortable with the overall structure of the company, it’s relatively straightforward to recognize how cheaply Brookfield Corporation (TSX:BN) is trading today.
To best illustrate, consider that BN’s stock price is $42.72 as of writing. Within BN are ownership stakes in the various other Brookfield publicly traded entities that tally to ~$50 per share. Considering the company’s net debt, the market is currently valuing BN as if it only owns those stakes in the publicly traded entities. There is zero value attributed to BN’s private investments, such as its growing insurance business and its extensive commercial real estate portfolio.
Therein lies the rub, Fools. In our opinion, the reason the valuation opportunity exists is because of BN’s commercial real estate exposure. And to that we say: Bring it on. Maybe this exposure is worth less than it was, but it almost certainly isn’t worthless.
You know who else recognizes this opportunity?
Chairman and CEO Bruce Flatt has been actively buying more shares of BN. At last report, Flatt had acquired more than $100 million worth of BN, bringing the total value of his position to just under $2.8 billion.
In Bruce we trust, and valuation is but one reason to own BN. It’s a good one, though, and it made for an easy selection as one of this month’s Best Buys Now in Stock Advisor Canada.
