Investing.com -- In the summer of 2024, Third Point, the hedge fund managed by Dan Loeb, acquired a new position in Brookfield Corp. The news was revealed in the hedge fund's fourth quarter letter to its shareholders.
Third Point expressed optimism about Brookfield Corp's prospects, citing the company's standing as one of the largest global alternative asset managers, boasting over $500 billion in fee-earning assets under management (AUM). The hedge fund believes Brookfield is well-positioned to benefit from growth in infrastructure and private credit, two rapidly growing asset classes in the alternative sector.
The hedge fund pointed out Brookfield's preeminence in the infrastructure space, where it is expected to benefit from an estimated $100 trillion global funding gap in traditional infrastructure through 2040. The company's demand for digital infrastructure to support data and computing needs is also expected to increase.
Brookfield's long history of owning and operating real assets, which predates its asset management franchise, was mentioned as a strength. In 2022, the company successfully raised its Global Transition fund at a notable $13 billion first vintage. Furthermore, in 2023, it closed the largest infrastructure drawdown fund ever raised at $28 billion.
In the private credit sector, Brookfield has integrated Oaktree, which it acquired in 2019, with its unique debt origination capabilities in infrastructure and real estate. The company also has a growing insurance franchise, writing almost $20 billion of new business annually.
Despite its scale and growth, Third Point believes Brookfield is under-appreciated and under-covered as an equity story. The stock trades at approximately 13 times the following year's earnings, which is more comparable to traditional asset managers than its alternative peers, who trade at 20-30 times.
Third Point sees potential catalysts for a re-rating of Brookfield's stock. The fund believes that the company's management has begun to simplify its equity story and improve its communication with investors. They see Brookfield as a business with a re-rating opportunity and strong earnings compounding in the underlying asset.
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