Up 14% in 2023, Is BAM Stock Still a Buy Today?

BAM (TSX:BAM) stock remains up 14% in the last year, but has been a bit confusing for investors wondering whether they should hop in.

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Brookfield Asset Management (TSX:BAM) continues to be one of the few stocks on the TSX today that’s actually doing well. BAM stock is now up 14% in 2023 alone, yet has dropped down more recently. So, let’s look at why and whether BAM stock is a buy on the TSX today or not.

Drop in earnings

The recent drop for BAM stock came after the company reported third-quarter earnings that missed out on estimates. The stock achieved strong fundraising for the quarter, with $61 billion in capital raised up until that point in 2023. This included $26 billion in the third quarter alone. This sets BAM stock up for raising capital close to $150 billion in 2023.

The fundraising has allowed BAM stock to achieve a “leadership position” according to management in the private equity industry. Further, it managed to close its fifth infrastructure flagship fund. These funds should allow for the largest funds ever raised by a sponsor in these strategies.

“2023 is shaping up to be an excellent year for capital raising, which sets the stage next year for excellent earnings and dividend growth. With fundraising momentum continuing to ramp up in the fourth quarter, first closes coming for our second transition flagship fund and our fifth real estate flagship fund, as well as the anticipated completion of a contract to manage AEL’s insurance assets, we remain on track for close to our $150 billion capital raising target.”

Connor Teskey, president of Brookfield Asset Management.

Not everyone is impressed

Despite the major increase in fundraising, not all analysts have been impressed by BAM stock recently. In fact, one stated that the moves to create more companies and spinoffs have been confusing to investors. It’s why some Brookfield stocks have taken off while others haven’t.

For instance, BAM stock is meant to be a more tightly focused company when looking at opportunities for credit. But investors can also trade in shares of some of the Brookfield companies for others, leaving investors incredibly confused as to where they’re meant to invest.

Should you exchange them? Honestly, that would be taxable in many cases if you’re gaining capital gains in this case. So, I would stay out of that. Even so, BAM stock remains a confusing place for many investors. Therefore, what should they do now?

Hope for the best?

If you hold BAM stock, I would certainly continue to do so. After all, it is focusing more on creating growth in fundraising. While it’s missed out on estimates, this could hopefully change in the future. So, I don’t think you should suddenly ditch the stock.

However, if you’re looking to buy BAM stock at this point, it remains a confusing company. There are many options, and it looks like they continue to make changes and announcements all the time. Until there is some more stability, I would perhaps hold off.

That being said, if you’re confident about the growth in the sector and that BAM stock is here to stay, there are reasons to buy. There has been a dip in share price, now offering a 3.78% dividend yield for investors. So, while it may be a bit of a confusing stock to buy, it’s still a valuable one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

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