NVIDIA (NASDAQ: NVDA) is the current undisputed champion of the stock market. With a $4 trillion market cap, it is a true giant. It’s largely deserved too. NVIDIA does nearly $100 billion per year in profit, and that’s with profit growing at 65% year over year. It’s a pretty impressive company.
Despite all that, top NVIDIA shareholders have been selling their NVIDIA stock lately, with Stanley Druckenmiller being one known billionaire seller. It might seem strange for investors to be selling shares in such a profitable, competitively strong and fast-growing company, but the problem is that NVIDIA stock is pretty pricey. NVIDIA trades at 43 times earnings, and competitors are nipping at its heels, calling into question whether it can keep growing quickly forever.
Where are billionaires putting their money now? Many places. While the shine has somewhat come off of AI’s golden boy, the markets as a whole are still running hot.
One stock that’s been seeing increased investor interest lately is Brookfield Corp (TSX: BN). The company has a strong position in global asset management, being a preferred partner of governments, tech companies, and high-net-worth individuals alike.
Recently, Brookfield made headlines when billionaire investor Bill Ackman bought it in significant volume. Ackman liked the fact that the company had a lot of deployable investor capital on hand to invest, which he (or more accurately his team) felt would lead to rising amounts of distributable earnings.
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High growth
What are the main reasons why Bill Ackman bought Brookfield stock? Apart from the one already mentioned, there’s the fact that the company is growing quickly. In 2024, the company’s distributable earnings (DE) increased 24%, while DE before realizations (a measure that excludes one-off events like asset sales) increased 15%. It was a very good showing, and the growth continued for several quarters this year.
Discount to sum of the parts value
Another thing that Brookfield has going for it is a discount to its sum-of-the-parts (SOTP) value. If you sum up the market values of all Brookfield’s assets and subtract the debt, you get a figure lower than Brookfield’s current market capitalization. This discount was extremely large back in 2023, when BN stock was much cheaper than it is now and when the discount was greater than 50%. These days Brookfield is not below its SOTP value by an enormous margin, but it is below it, and so is still undervalued.
Great management
Last but not least, Brookfield has a great management team. Bruce Flatt is one of the best Canadian CEOs of the last 25 years, having grown Brookfield from a small utility company to an asset management giant. His lieutenant Conor Teskey is similarly competent, growing the subsidiaries he’s responsible for by high percentages without taking on too much debt. With management like this, we can expect Brookfield to keep succeeding.
Foolish takeaway
NVIDIA stock has been on a great run. But today, many billionaire investors think it’s time to look at other stocks. Cheap, competitive and fast-growing, Brookfield is one such stock that is very much worth the look. No wonder billionaire investors are interested.
