YB new stock pitches (Tue, Apr 29)

Brookfield Corporation (BN) is trading at a ~38% discount to its sum-of-the-parts valuation, with its 73% ownership in high-quality Brookfield Asset Management (BAM, trading at 28x P/E) representing two-thirds of BN's value. The company's underappreciated assets include Wealth Solutions, carried interest ($7B unrealized, expected to generate $10B in the next 5 years), $11B in private fund investments, $15B in publicly listed affiliates, and a $25B real estate portfolio. Distributable earnings (DE) are projected to double by 2029 from the current $5.3B to over $10B, generating $45B in cash flow over the next five years with $30B available for capital allocation. Growth catalysts include AI infrastructure investments, renewables, and insurance expansion through Brookfield Wealth Solutions (targeting $300B in insurance float by 2029). Despite strong growth prospects and a superb management team led by Bruce Flatt, BN trades at just 10-12.5x DE compared to peers KKR and Apollo at 16-21x DE, positioning the stock for potential 25%+ IRR as BN increases U.S. institutional investor engagement and continues its share repurchase program.

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FBD Holdings (EG7.F) delivered its strongest premium income growth in years, up 12% in 2024 while maintaining robust profitability, driven by market share gains in its core agricultural segment which now represents over half of revenue. The company's bond portfolio benefited from reinvestment at higher interest rates, further boosting financial income. Despite a return on equity exceeding 15% and a history of conservative reserving, FBD trades below book value at a P/E of approximately 7x, or 5-6x when adjusted for its overcapitalized balance sheet. With a dividend yield above 15%, shareholders can achieve attractive returns even without capital appreciation. The company's growth momentum, particularly in the farming sector where it maintains clear market leadership in Ireland, has been aided by competitors either exiting the market or pricing themselves out of the agricultural segment.

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Jarvis Securities (JIM.L), a UK brokerage with an $8.65M market cap, has agreed to sell its execution-only business to Interactive Investor for up to $14.6M in cash, payable in three tranches: $11.93M upon completion, $1.33M at 12 months, and $1.33M at 18 months. The deal is conditional on retaining 90% of client assets ($1.52B of $1.69B) and customers by July 2025, with a 70% estimated chance of completion. Post-sale, Jarvis plans to shut down its clearing business over 15 months, then seek delisting from AIM and distribute remaining reserves to shareholders (insiders own 37.18%). The immediate upside is 37.9% based on the first payment, with a calculated 47.4% IRR using Graham's arbitrage formula. Downside is limited by $7.85M in cash on Jarvis's balance sheet, though some cost-conscious customers are already planning to leave due to Interactive Investor's new fee structure, which poses the main risk to deal completion.

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