Brookfield Business Partners: a Plethora of Problems and Overvalued
Management said units have upside to $80, but doesn’t disclose detailed company information. Credit ratings suggests financial stress is widespread in the portfolio. Which story do you believe?
We are short Brookfield Business Partners (BBU) and Brookfield Business Corporation (BBUC).
The plethora of problems include an undisclosed SEC investigation, probable undisclosed related-party financings, and parent selling at the LP-level.
The partnerhip’s portfolio is dominated by companies are rated deep junk, hovering at just above CCC+, where default risks spike. Investment risks are highlighted with the recent failures of Healthscope and Altera Investment, and short analysis of Mulltiplex and Modulaire.
After a recent ~35% increase in the unit price, BBU trades at a premium to NAV where most comparable vehicles trade at a -30% discount.
The full report is available here:
DISCLAIMER
This report represents the opinions of Keith Dalrymple and Dalrymple Finance on Brookfield Business Partners. It is an opinion piece and should not be taken as investment advice of any kind. This is not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
BBU’s web page has a list of sell-side firms that provide research coverage. The firms and analysts listed are in the business of providing investment advice to individual and institutional investors. We strongly encourage those seeking investment advice to consult one or more of the sell-side research firms listed.
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Following the publication of this report we intend on continuing to transact in the securities. We may be long, short or have no position at any time. That position may change at any time.
We are investors with the goal of profiting from our research. You should assume that as of the publication date, that Dalrymple Finance, Keith Dalrymple and/or affiliates have a position in related securities. We and affiliates have a vested financial interest in entity discussed in this report.
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Excellent, eye-opening work. Thanks for sharing.