Saltlight Capital, an asset management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. SaltLight Capital Management started in 2015 and has grown tremendously, with assets under management doubling each year. The fund’s investment process is continuously evolving. The SaltLight SNN Worldwide Flexible fund returned -22.50% for the 1st quarter of 2022. Management expects to grow fee-bearing assets under management to $830 bn over the next five years. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, SaltLight Capital mentioned Brookfield Asset Management Inc. (NYSE:BAM) and explained its insights for the company. Founded in 1997, Brookfield Asset Management Inc. (NYSE:BAM) is a Toronto, Canada-based investment management company with a $77.8 billion market capitalization. Brookfield Asset Management Inc. (NYSE:BAM) delivered a -21.84% return since the beginning of the year, while its 12-month returns are down by -4.22%. The stock closed at $47.19 per share on June 10, 2022.
Here is what SaltLight Capital has to say about Brookfield Asset Management Inc. (NYSE:BAM) in its Q1 2022 investor letter:
“During times like this, it is always helpful to remember what your portfolio is built with. One company that we’ve alluded to in the past is Brookfield Asset Management (NYSE:BAM). We’ve been invested in BAM across our various funds since 2019 and could not describe a more ‘resilient, indispensable and durable’ portfolio company. BAM is one of the largest alternative asset managers in the world, but it has some nuances that make it screen poorly (we’ll get into that). It started life as an industrial conglomerate called Brascan in Canada and so in line with general Canadian culture is understated and stays out of the limelight.
Bruce Flatt has been the CEO for over two decades and is the type of manager that we seek to partner with: honest, trustworthy, and extremely capable. We highly recommend watching these two videos: a Google talk in 2018 and this David Rubenstein interview to get a sense of Flatt. Importantly, BAM is not just about Flatt and his singular investing skills as many asset managers are. This is a widely scaled business. We’ve been impressed with the caliber of up-and-coming executives operating the individual businesses which give us confidence that the BAM culture will be retained for many decades to come.
BAM is unique in that it is an asset manager of third-party capital (called Limited Partners or LPs) but it also co-invests with its investors using its own capital. It certainly eats its own cooking (something that we can resonate with). Therefore, the intrinsic value should be comprised of invested capital plus the discounted value of future fee income. On top of this, if they generate outsized returns, they earn performance fees over an agreed-upon hurdle rate (called “carried interest”). BAM has an enviable track record, but a big part of their differentiation is that they run an internal operating business as well. Alongside investing staff, they have operators, engineers and domain experts that can optimize the operations of their investments. This allows them to buy cheap ‘fixer uppers’, send in their operators and re-sell them at a premium valuation. This is their secret sauce.”
Our calculations show that Brookfield Asset Management Inc. (NYSE:BAM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Brookfield Asset Management Inc. (NYSE:BAM) was in 35 hedge fund portfolios at the end of the first quarter of 2022, compared to 29 funds in the previous quarter. Brookfield Asset Management Inc. (NYSE:BAM) delivered a -11.79% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on Brookfield Asset Management Inc. (NYSE:BAM) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
