Tito Avila of LIS Capital presented his in-depth investment thesis on Brookfield Corporation (US/Canada: BN) at Best Ideas 2026.
Thesis summary:
Brookfield is not a traditional asset manager but rather a capital allocator overseeing a diverse ecosystem of businesses. The company controls over $180 billion of discretionary capital and functions as a platform designed for long-term compounding. Structurally, the entity relies on three main pillars: a majority stake in Brookfield Asset Management (BAM), which serves as the fee and carry engine; Brookfield Wealth Solutions (BWS), an insurance platform providing long-duration permanent capital; and directly owned Operating Businesses in infrastructure, renewables, real estate, and private equity. This configuration allows BN to upstream cash flows from subsidiaries and redeploy them into high-return opportunities across the ecosystem, optimizing for returns on invested capital.
The thesis is underpinned by sustainable cash flow growth driven by structural tailwinds, including the demand for infrastructure fueled by AI, the energy transition, and an aging population requiring retirement solutions. Tito notes that BN is positioned to capitalize on the consolidation of the alternative asset management industry and the growth of private credit, reinforced by the Oaktree acquisition. Management guidance implies up to 25% annual growth in distributable earnings (DE) over the next five years, supported by the scaling of fee-bearing capital and the compounding of the insurance float. BWS is particularly strategic, utilizing an investment-led model to generate spread earnings by allocating float into high-quality credit and real assets where the firm possesses deep expertise.
A critical component of the investment case is the owner-operator culture and strong alignment of interest. Senior management holds a 20% stake in the company, fostering a long-term horizon and a focus on downside protection. Tito highlights BN’s history of contrarian capital allocation, utilizing a conservative balance sheet to invest during periods of stress when capital is scarce. While the real estate arm (BPG) has faced cyclical headwinds, the debt is structured as non-recourse to the parent, containing systemic risk. The strategy involves recycling capital from mature assets into higher-return opportunities, a process accelerated by the anticipated realization of accrued carried interest, which Tito describes as a “hidden gem” with $12 billion in realizations expected over the next five years.
Regarding valuation, the shares recently traded at a meaningful discount to peers and roughly a 30% discount to management’s estimate of plan value. Tito attributes this gap to structural complexity, lack of inclusion in major U.S. equity indices, and lower market visibility relative to competitors. A conservative sum-of-the-parts analysis, which marks public holdings at market and applies haircuts to private assets and carry, suggests limited downside. Even without a re-rating, the thesis projects a long-term IRR in the mid-teens to low-20s percent range, driven primarily by organic cash flow growth and reinvestment. Any narrowing of the discount through potential catalysts, such as eventual index inclusion or improved communication, would provide optional upside.
Disclaimer
Best Ideas 2026 was held from January 6-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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