This is a new teaser that has gotten the attention of many of my readers, if my bulging emailbox is any indicator. The special report, which they’re releasing to subscribers on April 2nd, is called “America’s New Currency: How a Unique ‘Legal Tender’ Helps Americans Grow Wealthy Regardless of the Economy or Dollar.”
If you know the Gumshoe at all, you know that he doesn’t want to wait until April 2nd to figure out what this might be. So let’s continue … Read the rest of this entry »
OK, so moving on … this one took a little more time, but I think we’ve worked out the ‘The Canary Warf Estate” so it can join the first four secret socieities we’ve sniffed out from the Porter Stansberry Investment Advisory teaser.
Here’s what this one owns:
Part of Canary Wharf (a big London office development).
“14 office buildings in New York, 2 in Boston, 32 in Washington DC, and 22 in Los Angeles.”
129 “power generating stations.”
“over 6,000 miles of power transmission lines.”
And, to whet your appetite, “They have “given shareholders 884% gains since the beginning of 2000.”
Other specific clues?
49% year over year earnings growth in the last quarter.
Shareholder return of 513% since “the beginning of 2003.”
So what are we looking at here?
It’s yet another holding company, but this one’s a little bit different — it’s primarily an investment management firm, it Canadian, and it’s …
Brookfield Asset Management (BAM)
BAM! Love that ticker symbol. And we’ve seen this one teased before, back when Navellier was calling this the next Berkshire Hathaway (or calling Bruce Flatt the next Warren Buffett … I forget which). Navellier could well have sold it since then, that was a long time ago.
Brookfield, formerly known as Brascan, is known for a lot of things — a strong presence in Brazil, including a homebuilding firm that went public down there in the last year or so, a nice portfolio of hydroelectric power, lots of timber, and, of course, lots of real estate holdings, including the aforementioned piece of Canary Wharf.
Like Macquarie in Australia, Brookfield focuses on infrastructure and helps investors, especially institutional investorts, to invest in infrastructure assets, especially things like electrical power (almost all of their power generation capacity is hydroelectric, too, which also has the benefit of being clean and green). The company itself owns interests in a lot of these properties, but they also leverage their influence, I suppose, because they also run specialty investment funds that invest in more or less the same kinds of assets.
I’ve liked this company for quite some time, but don’t own shares — they’ve always seemed a little pricey to me, though that’s not perhaps that fair. The PE is quite high, with a forward PE of about 37, much higher than the trailing PE of 20 or so, which must mean they sold some assets this year and I’m guesing that analysts are somewhat nervous about the growth potential of their real estate and timber holdings. Among the other holding companies we’ve looked at here BAM stands out as pricey partly because they’ve got a more asset-light model, as an asset manager, so that’s why we see a price/book ratio of 3.6, dramatically higher than Berkshire, Icahn Enterprises, or Loews.
I think part of my hesitation about the price of Brookfield comes because I haven’t taken the time to really understand the value of their holdings, many of which are probably on the books at lower than market prices … it’s starting to look like August might have been a real buying opportunity in this one, since that’s the only real hiccup in its shares that we’ve seen since 2000.
Any Brookfield fans or investors out there? Let us know what you think — again, it’s not much of a secret anymore, thanks to that incredible run of the last seven years, and it’s not much of a society, but it certainly is a well-respected, profitable asset manager with a pretty compelling (to me) portfolio of infrastructure, power, and real estate investments.
full disclosure: I current own shares of Berkshire Hathaway, but not any other firm or investment noted above.
You probably won’t find this shocking, but the Gumshoe is, at heart, a lazy man. So I’m skipping 3 and 4 while I work on them a little more, since they’re gumming up my brain cells, and moving on to the other “easy” teaser from the “secret societies” ad from Stansberry and Associates.
This one tells us that “The Boardwalk Club … has given shareholders the opportunity to make 619% gains since the year 2000.”
They get this secret, Stansberry-bestowed name from one of their holdings.
They focus on “some of the most luxurious goods and investments in America,” which include:
“16 hotels in America’s most exotic locations: Santa Monica, Miami Beach, Beverly Hills, San Diego, and Denver, just to name a few.”
Really? San Diego and Denver are “exotic?” okay ….
A famous watch brand … an insurance business … and some kind of oil drilling business.
So that all sounds pretty good, luxury and oil drilling and insurance, all things that have been in the sweet spot lately. What is the “Boardwalk Club?”
Well, thanks to their unique portfolio and relatively high profile, this one took just a few moments in the Thinkolator 4000 before the Gumshoe, along with a few readers who suggested the solution, could reveal that what we’re talking about here is …
Loews Corp (LTR)
This is the investment holding company of the Tisch family, who are very well known in New York (as part owners of the New York Giants, among other things … the Giants are not in Loews’ portfolio, FYI)
The Watch company is Bulova, the oil drilling arm is Diamond Offshore, an offshore driller that I really like (also traded separately as DO — Loews owns 51%), the hotels are, of course, Loews Hotels, and the insurance company is CNA (Loews owns 89%).
You can add 75% of a pipeline company (Boardwalk Pipeline Partners … aha! That’s where that Boardwalk name comes from … sneaky), a natural gas exploration and production company, and, unfortunately (for me), Lorillard, maker of Newport and other cigarettes.
That last one is why I’ve never owned Loews, though I love their mix of products and companies. Lorillard is a huge part of their business, though probably a declining part, and while I’m generally not interested in socially responsible investing as a guiding principle, I’m personally not willing to invest directly in tobacco companies. I have considered several times an investment in Diamond Offshore, which is my second-favorite offshore drilling company, but the shares climbed so fast that I kept waiting and waiting for a better price … and decided, at least in recent days, to stick with the driller I already own, Seadrill.
Loews is certainly a phenomenally successful holding company, and one that is a bit more focused that many of the big holding companies — the holdings I mentioned above are pretty much it, so while it seems like a fairly large and diverse portfolio it is actually relatively focused if you think of it as an investment portfolio, just a half dozen major investments, with either controlling or 100% interest in all of them.
Unlike some of the others, this is not a partnership — just a corporate holding company, not unlike Berkshire Hathaway, so although you’re still faced with an earnings number that doesn’t necessarily tell the whole story (you really have to delve into the major holdings individually if you want to carefully judge the future value of the firm), you do at least not have to deal with partnership tax complexities.
And just looking at the basic metrics, it certainly looks cheap on its face, with a forward PE under 10 and a very Berkshire-like price/book ratio of about 1.5. You don’t get much of a dividend at the moment, though they have raised the dividend every five years or so in recent memory (still just half a percent, so probably not a big part of the decisionmaking process).
So, the Gumshoe likes Loews, though they don’t seem particularly secret, and he can’t argue much with this selection. Lorillard is the one reason I’ve never seriously considered buying shares of this one (if you have a different perspective and prefer the tobacco business, you can also invest in a tracking stock for just that part of the Loews empire, it’s called Carolina Group and trades as CG).
full disclosure: I do own shares of Seadrill and Berkshire Hathaway, but not of any other company mentioned in this note.
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