It’s always interesting to see where big money is moving, right? Lately, some high-net-worth investors seem to be shifting things around in their portfolios. They’ve been selling off some of their shares in Alphabet (NASDAQ:GOOG) and showing more interest in Canadian company Brookfield Asset Management (TSX:BAM). This kind of switch can tell us a bit about what these big players are thinking about the market, especially when it comes to finding stable growth right here in Canada.
Why the move?
First, why are billionaires selling? Alphabet, the company that owns Google, has been a superstar in many investment portfolios for ages. It’s known for dominating the world of online ads and being a leader in cool tech like artificial intelligence (AI). In the last three months of 2024, Alphabet pulled in a whopping US$96.5 billion in revenue. That’s a solid 12% jump from the year before! And its earnings per share (EPS) were US$2.15. Even Google Cloud saw its revenue shoot up by 30% to US$12 billion, and YouTube’s ad revenue hit US$10.5 billion. Those are pretty impressive numbers!
But even with these great results, some investors have been a little cautious about Alphabet. One reason might be the company’s plans to spend a lot of money, around US$75 billion in 2025. That’s mainly on building up its AI infrastructure. This big spending has made some folks wonder if the long-term returns will be worth it, especially since there are a lot of other companies also jumping into the AI game. And that spending might not be the best timing given the ongoing market volatility, especially in the tech sector.
BAM instead
However, Brookfield Asset Management is looking like a more appealing option for investors who want to focus on Canada’s economic growth. Brookfield is a big player in managing alternative assets, with over US$1 trillion under its belt! The TSX stock specializes in things like renewable power, infrastructure, private equity, real estate, and credit.
Brookfield’s diverse mix of investments can act as a bit of a shield when the market gets bumpy. Plus, the focus on real, tangible assets seems to fit with the growing demand for investments — ones that are both sustainable and, well, real! The TSX stock’s recent financial results show this strength. In the latest quarter, net income was US$186 million. This is a big jump from the US$95 million made the year before. Things seem to be heading in the right direction.
What’s more, Brookfield seems keen on rewarding its shareholders. It recently increased its dividend, showing it’s feeling good about its financial health and where it’s headed. The forward dividend yield is currently around 3.68%, which gives investors a steady stream of income just for owning the TSX stock. That can be pretty attractive, especially in a market where growth can sometimes be uncertain.
Bottom line
This shift we’re seeing from Alphabet to Brookfield among wealthier investors highlights a bigger trend. It seems like there’s a preference right now for investments that offer a good mix of growth potential and stability. Brookfield’s focus on essential services and infrastructure puts it in a good spot to benefit from Canada’s economic development and the global push towards more sustainable investments. Things like renewable energy and well-maintained infrastructure are likely to be in demand for a long time.
While Alphabet will likely continue to be a major force in the tech world, Brookfield’s appeal lies in its solid, tangible assets and its consistent performance. For investors who want to align their portfolios with the growth story of Canada, Brookfield Asset Management is definitely looking like a compelling option. It’s like choosing a sturdy oak tree over a fast-growing but perhaps less stable vine. Both have their merits, but in certain economic climates, the oak might just feel a bit safer.
