Billionaire investors have been shifting their portfolios, and one surprising move has caught the market’s attention. Many are selling Amazon (NASDAQ:AMZN) shares and buying Brookfield Asset Management (TSX:BAM) instead. While Amazon has been a tech titan for decades, some of the world’s wealthiest investors are recognizing that its high valuation and slowing growth could mean it’s time to look elsewhere. And where are they putting their money? They’re putting it into a Canadian asset manager with a proven track record of stability, cash flow, and long-term growth.
What’s happening?
Amazon’s most recent earnings report showed impressive growth, with revenue hitting US$620.13 billion in the trailing 12 months, an 11% increase year over year. The e-commerce and cloud computing giant also saw a net income jump to US$49.87 billion, marking an impressive 55.2% gain from last year. These numbers suggest Amazon remains a strong business, but its valuation is a different story. With a trailing price-to-earnings (P/E) ratio of 50.46 and a forward P/E of 37.88, the stock is priced for perfection. Billionaires, however, seem to be signalling that the easy money has already been made.
One of the most notable sellers is Citadel Advisors, led by billionaire investor Kenneth Griffin. Griffin’s fund recently sold more than 90% of its Amazon stake, a move that suggests institutional investors are locking in gains. Instead of doubling down on the e-commerce giant, many are shifting their attention to more defensive, value-oriented plays. That’s where Brookfield Asset Management comes in.
Why Brookfield
Brookfield is one of the largest alternative asset managers in the world, with over $850 billion in assets under management. Unlike Amazon, which depends on consumer spending and digital services, Brookfield focuses on hard assets, like infrastructure, real estate, and renewable energy. These industries provide stable cash flows and long-term growth.
Brookfield’s most recent earnings report shows why investors are taking notice. The TSX stock posted record fee-related earnings of $644 million in the third quarter (Q3) of 2024, a 14% increase from the same period last year. Distributable earnings also grew to $619 million, marking a 9% gain. The company’s revenue model is built on managing assets with predictable returns, making it less susceptible to short-term market swings than a tech stock like Amazon.
Why billionaires are buying
Billionaire investor Bill Ackman has been one of the biggest buyers of Brookfield stock, increasing his stake fivefold since June to hold over 22 million shares. Ackman is known for making bold bets on undervalued businesses with strong fundamentals, and his interest in Brookfield is a testament to its long-term potential.
One key reason billionaires are favouring Brookfield is its focus on infrastructure and renewable energy. Governments around the world are pouring money into green energy projects, and Brookfield is at the forefront of this shift. With major investments in wind, solar, and hydroelectric power, the TSX stock is well-positioned to benefit from the global transition to cleaner energy sources.
Another reason for the move? Brookfield offers something Amazon doesn’t: a strong dividend. Brookfield’s forward annual dividend yield sits at 2.64%. This may not sound like much, but it’s a compelling feature in a world where steady income is hard to find. Amazon, however, doesn’t pay a dividend at all, relying entirely on capital appreciation for investor returns.
Foolish takeaway
Looking ahead, Brookfield has ambitious growth plans. The TSX stock aims to double its assets under management to $2 trillion within the next four years, which, if successful, would drive significant earnings growth. Its real estate and private equity divisions are also expanding, further diversifying its revenue streams.
So, Amazon remains a dominant force in tech. Yet the smart money is recognizing that its best days of hypergrowth might be behind it. With valuations stretched and regulatory scrutiny mounting, billionaire investors are pivoting toward more stable, income-generating assets. Brookfield Asset Management, with its focus on hard assets, infrastructure, and dividends, is shaping up to be the kind of TSX stock that can weather a market downturn and provide steady returns for years to come.
