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Wednesday, November 19, 2008 10:13:46 PM
http://www.fool.com/investing/general/2008/11/06/bip-is-no-mere-blip.aspx
Christopher Barker
November 6, 2008
Short-term traders sprint like hares, often hopping between speculative hunches and under-researched bandwagons. Fools, on the other hand, are content to sit on the tortoise's shell, armed with a mantra as relevant today as it is during bull markets: slow and steady wins the race.
In a market environment like this, tortoises are admittedly no less susceptible to short-term setbacks than their hippity-hoppity counterparts, and long-term investment specialist Brookfield Asset Management (NYSE: BAM) has not been immune to the turmoil. Seeking a balanced portfolio of infrastructure assets, including utilities, transportation, and timber operations, BAM spinoff Brookfield Infrastructure Partners (NYSE: BIP) is looking to win the race for stable income and capital appreciation.
Brookfield Infrastructure posted adjusted operating cash flow of $13.1 million for the third quarter, representing a 25% decrease from the prior year. Net income reversed course from a $5.3 million gain in 2007 to a $1.4 million loss for the latest quarter. Despite solid returns from the company's Chilean electric transmission lines, thanks to a retroactive rate hike and favorable currency exchange rates, the third quarter was broadsided by severe weakness from the timberlands segment.
Brookfield offered a decidedly negative outlook for the timber industry -- echoed by recent results from Weyerhaeuser (NYSE: WY) and Louisiana-Pacific (NYSE: LPX) -- and is adapting by conserving its inventory of secondary-growth Douglas fir until returns are more favorable. Meanwhile, BIP perceives an historic opportunity to acquire additional assets at distressed valuations, thanks to the panic of 2008.
BIP will divest a minority stake in non-core transmission line assets in Brazil for anticipated proceeds of $270 million. Combined with a sizable credit facility, the company now expects to have $600 million in its coffers with which to capitalize on the bargains available to grow its asset portfolio. For starters, Brookfield Infrastructure will invest $103 million to maintain a 30% interest in Longview Timber Holdings, as that company issues shares to purchase nearly 68,000 acres of timberland in Washington.
With a 7% dividend yield exceeding those of even REIT-structured timberland plays like Rayonier (NYSE: RYN) and Plum Creek Timber (NYSE: PCL), Brookfield Infrastructure is not without its rewards. With timberlands looking like a potential long-term drag on earnings, though, I would like to see Brookfield Infrastructure place greater emphasis upon acquiring transportation and utility assets before I re-affix my Foolish seal of approval.
Recent BAM News
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/13/2024 11:00:07 AM
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- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 06/12/2024 04:15:09 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/08/2024 01:44:26 AM
- Brookfield Asset Management Announces Results of Annual Meeting of Shareholders • GlobeNewswire Inc. • 06/07/2024 09:52:10 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/07/2024 09:12:25 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/31/2024 08:06:56 PM
- Brookfield enters into exclusive negotiations with Impala and other shareholders to acquire a majority stake in Neoen and launch a mandatory tender offer for 100% of the company • GlobeNewswire Inc. • 05/30/2024 10:55:00 AM
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- Brookfield Asset Management Announces Strong First Quarter Results • GlobeNewswire Inc. • 05/08/2024 10:45:00 AM
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- Scout Clean Energy Closes $100 Million Equipment Supply Loan • PR Newswire (US) • 05/06/2024 12:00:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/06/2024 11:00:06 AM
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- Partners Value Split Corp. Announces 2023 Annual Results • GlobeNewswire Inc. • 03/29/2024 02:00:00 AM
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- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/07/2024 11:45:04 AM
- Brookfield Asset Management Announces Strong Fourth Quarter Results and 19% Dividend Increase • GlobeNewswire Inc. • 02/07/2024 11:45:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/05/2024 12:00:09 PM
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