Tag: BPO

This is converse to the way most companies end up doing it. Usually when times are good they buy back stock at highs and then tough time restrict their cash and nothing is bought back at the lows. Not this time….

For those not familiar with it here is the original investment thesis for Brookfield Properties (BPO)

The report said (emphasis mine):

Dow Jones) TD raises Brookfield Properties (BPO) to hold from reduce, citing a “dramatic turnaround in freely useable liquidity.” Firm says the Canadian office giant recently raised $1B in an equity offering that improved its outlook dramatically. “With our liquidity concerns essentially gone, we no longer see reason for a material discounted relative valuation,” TD says. BPO up 1% at $1.38.

Relative valuation is the key here. The REIT industry is currently trading at a PE ratio of about 14 times earnings. Brookfield, at 6 times. What the report is saying is that Brookfield now should not have a “material discount” it now does to the industry. Simply put, the stock can rally 100% and still trade at a discount to its peers (barring any large earnings surprises).

We bought shares at $9.54 and will hold them as this is a class management team whose company is trading a a large discount to its true value…

Disclosure (“none” means no position):Long BPO, none