Statement on Brookfield Asset Management and its family of subsidiaries

Too complex. Bruce Flatt is undoubtedly a genius (in John Malone style), but compare Brookfield with the relative simplicity of Berkshire (despite Berkshire controlling a much larger asset base) and there is such a huge night and day difference. My general issue with large conglomerates with lots of partially owned but controlled subsidiaries is that you run into agency issues with the boards having common members, but having to guess which arm of the company is going to be advantaged (or whether it mostly flows to management).

So a long time ago, I excluded Brookfield and its subsidiaries from being investment candidates – too difficult. I’ve always taken a superficial liking to Brookfield Property Partners (TSX: BPY.UN) (their takeover of General Growth was well timed), but even that entity has a snake’s pit of issues relating to structure. There’s a whole bunch of other REITs trading on the TSX (and indeed the NYSE) that give property exposure with a lot less complexity.