We came across a bullish thesis on Brookfield Asset Management Ltd. (BAM) on Substack by Soren Peterson. In this article, we will summarize the bulls’ thesis on BAM. Brookfield Asset Management Ltd. (BAM)'s share was trading at $60.69 as of Feb 19th. BAM’s trailing and forward P/E were 45.63 and 33.11 respectively according to Yahoo Finance.
A vast expanse of solar panels stretching as far as the eye can see.
Brookfield Asset Management (BAM) is strategically positioned to capitalize on AI-driven infrastructure growth while maintaining resilience against sector-specific winners and losers. As a key player in asset management, BAM has methodically expanded into attractive sectors such as credit, leveraging its position within the broader Brookfield ecosystem to secure high-quality investment opportunities. The company benefits from its ability to raise capital efficiently, supported by Brookfield Corp (BN), its parent entity. Despite BAM's strong track record, its shares continue to trade at a relative discount to the long-term value it is poised to create, offering an appealing opportunity for investors.
Brookfield has a long history of restructuring to optimize shareholder value, having spun off business units and reacquired them when strategically advantageous. BAM was spun off from Brookfield Corp in Q4 2022 to streamline the company’s structure and create a focused, fee-generating asset management business. While Brookfield Corp retained a 73% ownership stake in BAM initially, a restructuring in Q4 2024 transitioned those shares to the public, simplifying the company's valuation. The firm’s reach extends across renewables, infrastructure, private equity, real estate, and credit, making it a diversified capital allocator with expertise in niche markets. The company’s robust fundraising capabilities and strong reputation enable it to capitalize on emerging opportunities while maintaining a margin of safety, given its affiliation with BN’s substantial dry powder.
The rise of AI and data-driven industries has increased demand for data centers, fiber networks, and renewable energy sources, areas in which BAM has already made significant investments. As AI applications expand, the infrastructure to support them will require substantial capital, and BAM is well-positioned to be a primary beneficiary. This exposure enables the company to generate long-term, stable revenues without being reliant on the success of individual AI companies. Additionally, BAM's recent expansion into credit has been a standout success. Just a year after launching its credit division, credit assets now account for 30% of total AUM. In 2024, 60% of all capital raised was for credit investments, a trend the company expects to continue. BAM has also increased its stake in Oaktree Capital, a leading credit firm, from 68% to 73%, and completed key acquisitions, including Castlelake’s aviation and asset-backed credit business and SVB Capital. These transactions are projected to generate $70 million in annual fee-related income (FRE), further solidifying BAM’s presence in the credit space.
Carried interest remains a valuable but often misunderstood aspect of BAM’s earnings. As the company’s funds generate returns exceeding a set benchmark, BAM is entitled to a share of the profits, typically 20%. While this source of income is cyclical, it has significant long-term value. Over the next decade, Brookfield Corp expects approximately $20 billion in cash flow from carried interest, valued at $30 billion today. For BAM, the impact of carried interest is expected to accelerate in 2029, generating an estimated $2 billion that year and growing to $7 billion by 2034.
Fundraising and capital deployment across BAM’s core business areas have been strong. In renewables, BAM raised $3.5 billion for its global transition strategy, with additional deployments into companies such as Neoen, Origis Energy, and Ørsted. In infrastructure, BAM raised nearly $2 billion, with monetization efforts including the sale of a fiber platform in France. Private equity saw $1 billion allocated to a Middle East-focused fund and $500 million to a special investments fund, while Clarios, a U.S. car battery maker, was refinanced at a $5 billion valuation, generating $4.5 billion in distributions. Real estate investments included $500 million for a flagship fund focused on multifamily housing and student housing, marking a shift from traditional shopping centers to more resilient assets. Credit investments saw $9.2 billion raised across Oaktree strategies, infrastructure debt, and insurance transactions, with $6.6 billion sourced from insurance clients alone.
BAM has demonstrated shareholder-friendly policies through consistent dividend growth. Since the spin-off, BAM has maintained a 2.5-3% dividend yield, recently increasing its payout by 15%. In contrast, buybacks have been more restrained due to the company’s valuation multiples. While BAM occasionally repurchases shares, management has prioritized reinvesting capital into high-growth areas rather than aggressively buying back stock at elevated valuations.
Valuation remains a key consideration for BAM investors. CEO Bruce Flatt, the architect of Brookfield’s ecosystem, chose to lead BAM over BN, signaling his confidence in the asset manager’s long-term potential. Comparisons to peers suggest BAM is attractively valued. Apollo Global Management (APO) offers a lower dividend yield of 1.12% with declining payouts, while Blackstone (BX) has experienced similar trends. Despite BAM’s relatively higher valuation multiples, its growth trajectory, fee-based revenue model, and strong pipeline of carried interest make it a compelling investment. The company’s ability to raise capital, deploy funds efficiently, and generate stable returns across cycles underscores its long-term upside potential. Investors looking for a way to capitalize on AI-driven infrastructure growth, credit expansion, and resilient asset management strategies without exposure to single-company risks may find BAM an attractive opportunity.
Brookfield Asset Management Ltd. (BAM) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held BAM at the end of the third quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of BAM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
