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Al,

 

I enjoy your posts and have profited from FFH Leaps few yrs back. I have looked at BAM and I think it has to be looked as 2 biz , asset gathering and asset management. Asset impairment has affected valuation of both biz. and as inflation hedge, in current deleveraging secenerio commercial market may have deflation ( due to oversupply by deleveraging)  and managing debt may become problematic. I have thrown this into too hard pile.

 

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I like BAM alot and have invested about 4% in them but, really wise they would further simplify thier operations. I know they have been divesting of assets and streamlining for some time but, I think more needs to be done.

 

They have too many platforms and other public companies under there umbrella which makes for a complex story. I however love the Management, like the assets, and think the value is there if they can keep up with debt maturities.

 

I think the Commercial Re will be fine and they may pickup a few properties and I like the energy assets alot. 

 

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I have been picking up small stakes in BAM over the past while, when it drifts down around the $18 level.  There is certainly no hurry.  The way I see it they have booked some of their unrealized losses against book value such as Norbord.  This would be a drop of >2 Billion.  With Bam as a shareholder NBD wont go out of business.  At some point the market for their products will turn up and BAM will book it as unrealized gains. 

 

Power has been cheap through the fall and winter, and the costs are now going up. 

 

The real estate division is high end.  I read that their lease turnover is about 5% over the next 5 years, so this division will continue to put out cash for the time being.  The tenants they have in London and Manhattan are not all going to move out on mass of their head offices.

 

Other assets are near the bottom of the cycle such as timber. 

 

From everyone I have talked to and everything I have read management is very good.  This company makes a nice juxtaposition to Fairfax since their is almost no duplication in assets.   

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BAM is an interesting diversified conglomerate. It's jockey is doing a very decent job. But it has one anchor : it's size. It's not as large as Berkshire, but it's significant.

 

If I would like to own a conglomerate in this "big size" category, what would I prefer to own over the long term? Berkshire or Brookfield? To me, the choice is easy to make.

 

Just my opinion.

 

 

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