Shares of Brookfield Asset Management (NYSE:BAM) slumped 10.1% in the month of October, according to data provided by S&P Global Market Intelligence. Interestingly, the alternative asset manager stock has recouped all of its October losses, some already within the first week of November. That performance has outpaced the market, indicating investors in Brookfield perhaps saw an opportunity after the stock’s October drop. That’s a reasonable argument given that October didn’t bring up any nasty shocks to justify the stock’s fall.
Brookfield shares were holding up strong until the second half of October, which is also when it made a couple of big deals.
First was its partnership with American Equity Investment Life Holding (NYSE:AEL), under which Brookfield agreed to reinsure $10 billion worth of American Equity’s liabilities while acquiring 19.9% stake in the company. Although Brookfield agreed to pay a substantial premium for the stake, the company is optimistic about the deal.
“This transaction represents a meaningful investment for us in the attractive U.S. insurance market and we believe our alternative asset strategies can deliver long-term value to the company,” said Sachin Shah, Brookfield’s Chief Investment Officer. Notably, Sachin Shah took over as Brookfield Asset Management’s CIO earlier in October after relinquishing his role as the CEO and becoming a vice chairman of Brookfield Renewable Partners.
Soon after, Brookfield struck a $2 billion in India with privately held RMZ, acquiring 12.5 million square feet of commercial real estate. It was the “largest-ever deal in the Indian real estate industry” according to RMZ. Brookfield already has a strong presence in the world’s second-most populous nation and its deal with RMZ is one step forward in high-potential growth areas like co-working spaces.
While its RMZ deal gives Brookfield a strong headway in a huge real estate market, its partnership with American Equity comes close on the heels of acquisition of stake in bond specialist Oaktree Capital. These moves suggest Brookfield Asset Management is expanding into newer areas of growth, which is encouraging news for long-term investors. Investors, perhaps, recognize the opportunity, which may partly explain the stock’s move up thus far in November.