Brookfield Asset Management (BAM) stock is nearing ATH: is it a buy?

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on Feb 12, 2024
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  • Brookfield Asset Management’s stock has surged in the past few months.
  • It is nearing an all-time high as the amount of dry powder hits $100 billion.
  • The company’s private credit business is growing at a fast pace.

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Private equity companies are doing well, with some of them trading at a record high. Brookfield Asset Management (BAM) stock price was trading at $41 on Friday, a few points below its all-time high of $41.21. Similarly, Apollo Global Management shares surged to a record high, helped by the strong performance of its credit business. Carlyle and Blackstone are doing great too.

Brookfield’s $100 billion dry powder

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Brookfield Asset Management is one of the biggest companies in the private equity business with over $916 billion in assets. The company owns assets across all industries, with its key sectors being infrastructure, energy, credit, private equity, credit, and insurance. It owns assets in over 30 countries, with most of them being in North America.

Brookfield’s stock price has done well in the past few months, helped by the strong performance of its business. The recent acquisition of GIP by Blackrock has also made PE companies with infrastructure segments more valuable. 

Further, the potential for rate cuts makes it possible that privately-held companies will be inclined to go public. It also raises the potential for mergers and acquisitions (M&A), which have rebounded in the past few months. 

Most importantly, Brookfield has a big private credit business. Its website lists this business to have over $150 billion in assets. Private credit is one of the fastest-growing areas in the financial services industry, helped by the fact that most banks are pulling back.

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Brookfield is also well-prepared for the next cycle of consolidation. It ended last quarter with over $100 billion, which it is ready to deploy across all its sectors. The most recent results showed that the company’s AUM jumped by 16% while the total distributable earnings for the year rose by 7% to $2.2 billion. 

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BAM is also investing hard. It invested $58 billion in 2023 and monetized $30 billion of its assets. Its inflows jumped to $98 billion. This is important because Brookfield, like other private equity companies, make money by charging a fee from its investments.

BAM is one of the safest companies in Wall Street and has a dividend yield of over 3.17%. It has an A- credit rating from most rating agencies like Moody’s and S&P Global. This performance explains why the company has a high premium than other PE firms. It has a forward PE multiple of 26 compared to the sector median of 10.

Brookfield Asset Management stock analysis

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BAM chart by TradingView

The daily chart shows that the BAM share price has been in a strong bullish trend in the past few months. It has jumped from a low of $28.07 in November to a high of over $40. This means that it has jumped by over 43% in this period.

The stock has remained above the 25-day and 50-day Exponential Moving Averages (EMA). It has moved above the Woodie pivot point at $40 and is nearing the YTD high of $41.21. The shares have formed a double-top pattern, which is one of the most bearish patterns.

The Percentage Price Oscillator (PPO) has also formed a bearish divergence pattern. Therefore, more upside will be confirmed if the price moves above the double-top point at $41.21. If this happens, the next point to watch will be at $50.

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