{"id":1106642,"date":"2019-03-21T12:30:24","date_gmt":"2019-03-21T12:30:24","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106982"},"modified":"2019-03-21T12:30:24","modified_gmt":"2019-03-21T12:30:24","slug":"congratulations-on-the-quick-profits-heres-whats-coming-next","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1106642","title":{"rendered":"Congratulations on the Quick Profits! Here\u2019s What\u2019s Coming Next"},"content":{"rendered":"

This post Congratulations on the Quick Profits! Here\u2019s What\u2019s Coming Next<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Well that didn’t take long!<\/p>\n

Just two weeks ago I wrote<\/strong><\/a> to you saying I believed Oaktree Capital Group (OAK) presented a great buying opportunity as a “hedge” against future stock market volatility.<\/p>\n

My plan was that Oaktree \u2014 with its near 7 percent dividend yield \u2014 would be a stock that could be held for the long term. Instead, just one week later Oaktree announced that it was being acquired at a healthy premium to the current share price.<\/p>\n

I guess this is goodbye to our portfolio hedge and hello to a very quick capital gain!<\/p>\n

\"\"<\/p>\n

These are first world problems, folks\u2026<\/p>\n

Brookfield Asset Management (BAM) is the company that is acquiring Oaktree. The purchase price is a 15 percent premium to where the stock traded when I wrote about the business.<\/p>\n

Oaktree shareholders have the option to take the $49 offer in cash or in shares of Brookfield. Oaktree has actually been trading slightly above the $49 offer price subsequent to the announcement, so shareholders who prefer cash can sell now and lock in this slight premium.<\/p>\n

If cash is your preferred option, then congratulations on the quick stock market win!<\/p>\n

If you are interested in maybe sticking around and becoming a Brookfield shareholder, I can tell you what kind of company you will be getting\u2026<\/p>\n

Brookfield Asset Management \u2013 A World Class Hard Asset Investor<\/h3>\n

My original thesis behind owning Oaktree was that as a distressed asset investor, the Oaktree business is countercyclical and thereby thrives when the economy and stock market suffer.<\/p>\n

That is what would have made Oaktree a useful “hedge” against turbulent times for your portfolio.<\/p>\n

All is not lost on that front, however.<\/p>\n

I believe that if you decide to accept Brookfield shares instead of cash in this transaction, you will still be very much an owner of a company that is a good portfolio “hedge” against turbulent times.<\/p>\n

This transaction involves combining Oaktree’s $120 billion of assets under management (AUM) with Brookfield’s $350 billion of AUM. That means that the countercyclical Oaktree business is still one-third of the business post-transaction.<\/p>\n

More importantly though, I believe that Brookfield post-transaction will be a superb company to own for the long-term through all economic cycles.<\/p>\n

This is not a combination of two lesser asset managers trying to become something bigger. This is a combination of two asset managers who are the best in the world at what each of them do\u2026<\/p>\n

While Oaktree is focused mostly on distressed credit opportunities, Brookfield specializes in the management of “hard” assets. By hard assets, I mean real estate (office, retail, multi-family), infrastructure (toll roads, ports, railways), and renewable energy (hydro, wind, solar).<\/p>\n

Like any asset manager, Brookfield receives a fee for investing capital on behalf of its clients. Where a typical mutual fund manager would invest that capital into stocks, Brookfield invests in and operates the hard asset classes I mentioned above.<\/p>\n

And by the way, Brookfield invests that capital very well, having generating an annualized 19 percent rate of return since the late nineties. That performance crushes the S&P 500’s 7 percent over that time and U.S. Treasuries’ 4 percent return.<\/p>\n

The driving force behind those superior investment returns is Brookfield’s CEO Bruce Flatt who has infused this company with a contrarian investment mindset. Flatt loves to go against the grain and can usually be found buying assets that are decidedly out of favor.<\/p>\n

No wonder then that he has often been referred to as Canada’s Warren Buffett.<\/p>\n

Since Flatt took over Brookfield as CEO in 2004, the company’s share price has widely outperformed the S&P 500.<\/p>\n

\"\"<\/p>\n

Now, with the Oaktree business as part of the company I expect those outsized returns to continue for years to come.<\/p>\n

You can sell Oaktree today and pocket a nice short term profit. Or you can take Brookfield shares and do very well for years to come. I think we win either way!<\/p>\n

Here’s to looking through the windshield,<\/p>\n

\"Jody<\/p>\n

Jody Chudley
\nFinancial Analyst, The Daily Edge<\/em>
\nEdgeFeedback@AgoraFinancial.com<\/strong><\/a><\/p>\n

The post Congratulations on the Quick Profits! Here\u2019s What\u2019s Coming Next<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post Congratulations on the Quick Profits! Here’s What’s Coming Next<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Today, Jody Chudley revisits his most recent winner, and gives shareholders a glimpse of the future…<\/p>\n

The post Congratulations on the Quick Profits! Here’s What’s Coming Next<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2074,2075,366,1876,477],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106642"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1106642"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106642\/revisions"}],"predecessor-version":[{"id":1106643,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1106642\/revisions\/1106643"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1106642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1106642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1106642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}