BAM bought by Mohnish Pabrai

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Hi,

As per the recent F13 filing, M Pabrai bought only BAM (in his American portfolio) in Q3.
Stock is down 26%, much more than most TSX stocks. I read they are supposed to split 1 to 4, but in a weird way, where a ;piece’ goes to the investors, and also to allow a section of the business to give high yield, to compete w Blackstone.
What are your thoughts on the company based on their balance sheet and projection, does Mohnish see something others don’t? stock bitten up significantly.

Thanks

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Asked on December 5, 2022 9:52 pm
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Private answer

Hey there,

We actually like BAM quite a bit. We are however, in a little bit of a weird period due to the spinoff. In the end, there will be two companies

1 - BN: Brookfield Corp - the current BAM and will effectively be a holding company that will have majority interests in all the Brookfield properties. It's yield will likely be similar to BAM.
2 - BAM: The *new* BAM which will be the asset management business that is being spun out of the current BAM.A

If one buys BAM.A today, you'd be entitled to 0.25 BAM for every BAM.A share held. Your BAM.A shares would then be transitioned to BN.

BN and the new BAM are expected to begin trading on Monday. So you can either wait till then and buy which ever one you choose (or both) or as mentioned, if you buy BAM.A today, you are still entitled to both. It is a little complicated, so if you have any questions just ask.

Bottom line - we still view it as a fantastic company that is currently undervalued. Asset managers in general are showing weakness which is likely why BAM has struggled, but this is still one of the best in the world. We think the pending spinoff is also leading to some confusion that is likely negatively impacting price at the moment.

Mat

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Posted by Mathieu Litalien
Answered on December 7, 2022 1:50 pm