I haven’t seen any posts on Brookfield Corporation notice of exchange of their class A stocks for non-voting Brookfield Reinsurance A-1 Shares. I am of the feeling that it would be better to hold the Brookfield Corporation class A shares. Is someone following this more closely since it is a MF recommendation?
Don’t know if you will be able to read this post from the Premium side of TMF:
But if you can’t here are some thoughts from a CMF:
"I’m honestly struggling to come up with a reason why someone who owns Brookfield Corporation would want to make this swap…
It seems to help the company in shifting some things around (“offer enables us to bolster the equity base and market capitalization of Brookfield Reinsurance without diluting either company”) but I don’t really see how this would benefit investors making the move, unless they were suddenly interested in the reinsurance business for some reason.
In their initial statements in August, Brookfield’s IR seemed a little clearer-- it basically is just for people who want more reinsurance in their portfolio:
"Brookfield Reinsurance also provides investors with an alternative, efficient means through which to hold an interest in the paired entity. This offer will enable Brookfield Corporation shareholders the opportunity to hold more of their interest in Brookfield Reinsurance should they wish to do so.”
Personally, I bought into Brookfield because it is a diverse, well-managed business, with its fingers in many cash-generative industries. For that reason, I would greatly prefer to continue sitting tight, rather than increasing my exposure to reinsurance, something I know very little about.
Of course, everyone’s investing situation is different, so the above is just one Fool’s opinion for himself. Perhaps someone looking for more investment exposure to the reinsurance sector might feel differently.
Personally, I am not going to exchange any of by Brookfield shares for the reinsurance Brookfield shares; but that decision is based upon my existing portfolio, as well as my financial circumstances, goals and risk tolerances.
Yours, by definition, will vary.
Bottom line: there is no one “right” answer; there is only the right answer…for you.
BL Home Fool
Thank you! I was able to get into the post through your link.
Happy to be of service!
If I understand the offer, the reinsurance payments will be return of capital, not dividends. Thus, it would be more tax efficient for a taxable account. If I am incorrect Fools, please correct me. However, if one accepted the exchange, the stock would be for the reinsurance business only.