Up by 23.02%: Is Brookfield Asset Management a Good Buy in December 2023?

As Brookfield Asset Management stock stays above 23.02% year to date, there’s confusion about whether it’s a good investment right now.

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Brookfield Asset Management (TSX:BAM) is one of the largest and best financial services companies that Canada has produced. The $19.74 billion market capitalization alternative asset management business offers its investors exposure to a portfolio of assets diversified across several industries.

BAM stock is involved in several industries, from the utilities sector to real estate and even the renewable energy industry.

By investing in BAM stock or in its various funds and partnerships, investors can get exposure to several industries through one asset. Brookfield Asset Management’s involvement in multiple industries sets itself up as an excellent investment for many Canadians. As an asset manager, the company enjoys diversified income streams.

Besides collecting fees in exchange for managing Brookfield funds, it owns positions in them, providing distributions and capital gains.

The recent downturn

As of this writing, Brookfield Asset Management stock trades for $47.83 per share. While up by 23.02% year to date, the stock went through a substantial downturn between mid-September and October’s end. The decline in its share prices can be attributed to the company’s third-quarter earnings report.

Brookfield Asset Management stock missed out on its estimates. However, the stock did do well afterward, achieving solid fundraising for the quarter. After its recent round of raising capital, BAM stock brought its capital to almost $150 billion for the year.

Too many spinoffs?

While the fundraising has been impressive, not everyone is convinced that it is an excellent investment. Some analysts have noted that Brookfield Asset Management’s decision to introduce newer spinoffs only confuses investors. Considering that BAM stock has had several spinoffs trading on the TSX for a while that have not kicked off, it is easy to see that being a possibility.

BAM stock investors can trade in some companies under its banner for others, leaving others confused as to where their investment capital might be better utilized. However, its funds operate much like mutual funds and exchange-traded funds (ETFs). Instead of marketing its bigger funds to retail investors, the funds are available to high-net-worth investors in a private capacity.

The exclusivity allows Brookfield to practice investment strategies typically disallowed in funds available to retail investors.

While several spinoffs might seem confusing for some investors, you must note that Brookfield funds have performed well for its investors. For BAM stock investors, that might not be the primary concern.

However, Brookfield Asset Management gets the fees for managing those funds, providing a large revenue stream to BAM stock while incurring minimal expenses. Due to its business model, BAM stock enjoys a high 50% net margin, which is the highest among all large-cap stocks trading on the TSX.

Foolish takeaway

Brookfield Asset Management is a top pick for many Canadian investors. With most of its funds performing well and plenty of room for growth across several industries, it still has the potential to grow shareholder value. While not without its ups and downs, Brookfield Asset Management can still be a good investment to consider.

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 Adam Othman 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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