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Blog Coverage Brookfield Announced Renewal of Normal Course Bid; Plans to Generate Excess Cash to Fuel Business Operations

Monday, 22 May 2017 08:15 AM

Active Wall Street

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LONDON, UK / ACCESSWIRE / May 22, 2017 / Active Wall St. blog coverage looks at the headline from Brookfield Asset Management Inc. (NYSE: BAM) as the Company announced on May 19, 2017, that it has received approval from the Toronto Stock Exchange (TSX) for its proposed normal course issuer bid to purchase up to 82,965,721 Class A Limited Voting Shares, representing 10% of the public float of Brookfield's outstanding Class A shares. Brookfield will pay the market price at the time of acquisition for any Class A shares purchased. Register with us now for your free membership and blog access at:

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One of Brookfield Asset Management's competitors within the Real Estate Development space, The Howard Hughes Corp. (NYSE: HHC), announced on May 03, 2017, its operating results for Q1 ended March 31, 2017. AWS will be initiating a research report on Howard Hughes in the coming days.

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The Announcement

Under terms of the announcement, purchases under the bid will be made through the facilities of the TSX, the NYSE, and any alternative Canadian trading system. The period of the normal course issuer bid will extend from May 24, 2017, to May 23, 2018, or an earlier date, subject to the case when Brookfield completes its purchases. All Class A shares acquired by Brookfield under the bid will be canceled and/or purchased by a non-independent trustee pursuant to a long-term incentive plan.

The number of Class A shares issued and outstanding were about 988.52 million, of which 829.66 million shares represented the public float as of May 09, 2017. In accordance with the rules of the TSX, the maximum daily purchase on the TSX under this bid will be 247,466 Class A shares, which is 25% of 989,865 shares which was the average daily trading volume of Class A shares on the TSX for the six months, ended April 30, 2017.

The Initial Bid

Under its prior normal course issuer bid that started on May 24, 2016, and stands to be expired on May 23, 2017, Brookfield purchased 2.71 million Class A shares through open market purchases on the NYSE. The weighted average price that Brookfield paid per Class A share acquired under this bid was $34.72.

Brookfield will enter into an automatic purchase plan on, or around June 26, 2017, in relation to the normal course issuer bid. The automatic purchase plan will allow for the purchase of Class A shares, subject to certain trading parameters. Outside of these periods, Class A shares will be repurchased in accordance with management's discretion and in compliance with the applicable law.

Company Growth Prospects

Brookfield is renewing its normal course issuer bid as it believes that, from time to time, the market price of its Class A shares may not fully reflect the underlying value of the business, assets and its future business prospects. The Company believes that, under such circumstances, the outstanding Class A shares represent an active investment opportunity for Brookfield. Additionally, a portion of its excess cash generated on an annual basis can be invested for an attractive risk adjusted return through the issuer bid.

Brookfield recently reported its Q1 FY17 results on May 11, 2017. Under the announcement, the Company reported an EPS of $0.08 for the period. The Company had a return on equity of 2.63% and a net margin of 6.76%. Prior to the announcement on May 05, 2017, Brookfield announced a monthly distribution of $0.0817 per share payable on May 25, 2017, to stockholders of record on May 18, 2017. Based on the closing price of $13.53 on May 04, 2017, the Fund's annualized distribution rate was 7.25%. The annualized distribution rate was 6% higher than the preceding month (April 2017) distribution rate of 7.31%, reported on April 07, 2017.

Stock Performance

At the close of trading session on Friday, May 19, 2017, Brookfield Asset Management's share price finished trading session at $37.50, advancing 1.96%. A total volume of 809.42 thousand shares exchanged hands. The stock has rallied 14.27% and 15.54% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have surged 14.03%. The stock is trading at a PE ratio of 30.07 and has a dividend yield of 1.49%. The net market capital for the Company as per its Friday's closing price was $36.84 billion.

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