Steinberg’s Valuation

Alexander Steinberg’s valuation of BAM. His $49 value is about the lowest I have seen for anyone who is long the stock. Has he missed something in his valuation or is sensibly conservative?

To value BAM as SOTP, I would use, say, 20 multiple for operating FFO plus $5B for carry. This is equal to ~$77B or ~$49 per share and is not dependent on whether Manager is spun off or not. I am quite optimistic about BAM shares in the longer term, will be holding my position but not add at the current levels. Accordingly, I do not see much value in the spinoff, am not familiar with its details yet, and am not 100% sure that BAM will implement it.

But this is just my personal opinion. Many SA authors are accepting BAM’s plan value as the stock’s intrinsic value. If you share this position and think that BAM is undervalued, you have to buy the shares aggressively right now and wait until BAM convinces investors of its plan value through the spinoff or otherwise.…

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It does seem conservative.

I haven’t done a deep valuation exercise since the Q2 numbers.
Those Q2 figures suggested one might reasonably expect a market price of about $50-52.50 around now.
Which, within rounding error, it is. Especially considering the ~6% inflation since that forecast.
(it should be noted that rising inflation is very good for BAM, in general)

That exercise is trying to estimate the likely price based on the trajectory of observable value
and the historical relationship between market price and observable value.
So, it’s a market price forecast, not an estimate of true value.

Of course they’ve had a couple of good quarters since then, so an update would no doubt give bigger numbers.
And many would argue that the historical average valuation multiple has been well below fair value.