I Just Bought More Of This Stock - Here's Why

Daniel provides a deep dive into Brookfield Asset Management (BAM) following its recent Investor Day, highlighting that while the stock has corrected 20% and sits 30% below its all-time high, the underlying business is stronger than ever. Daniel emphasizes that BAM's fee-bearing capital grew by 19% year-over-year and that the company is successfully integrating Oaktree, which provides a counter-cyclical hedge to the portfolio. Daniel notes that BAM is avoiding the redemption issues facing its competitors because its focus on essential infrastructure and real assets aligns with current global economic trends.

Daniel expects BAM to double its business by 2031, supported by the fact that 91% of its capital is permanent. Daniel highlights the growing carried interest, with $3 billion expected in the next five years, which will significantly boost future earnings. Despite some delays in realized carried interest due to high interest rates, Daniel points out that fee-related earnings remain on track or ahead of schedule. Daniel mentions that the company pays out 95-100% of distributable earnings as dividends, targeting a 15% annual dividend growth rate.

Using a conservative Discounted Cash Flow (DCF) model with a 15% growth rate and a terminal P/E of 25, Daniel calculates a fair value of $63 and a 5-year price target of $88. Daniel views the 4.5% dividend yield, which is expected to grow significantly, as a major attractor for total returns. Daniel concludes that the current market sentiment is overly negative, providing an excellent entry point for long-term investors.