HEADLINES
Wholesale Sales Estimated to Have Dropped in August
Canadian wholesale trade weakened last month, with an advance estimate pointing to a pullback in sales.
Statistics Canada's early tally of wholesale receipts points to a 1.5% decline in August sales from the month before, which would mark a retreat after rising sales the previous two months.
The estimates show that the decline mainly reflects lower activity in agricultural supplies, as well as a decline for motor vehicle and parts wholesalers, the data agency said Friday. The data doesn't cover sales of petroleum products.
U.S. Not Rushing to Strike Deal With Canada, Washington's Trade Envoy Says
Washington's point man on trade said the United States isn't rushing to strike a deal with Canada that would end the trade war because it is still receiving what it needs, The Globe and Mail reported.
United States Trade Representative Jamieson Greer was asked during an interview with CNBC on Friday about relations with Canada, given the damaging trade war that has escalated in recent weeks after Ottawa walked away from negotiations in August.
"We're still getting what we need from them in terms of oil, gas, potash, all of these things. We're shipping [agricultural products] back and forth across the border, so there's still a lot of strong trade between the two countries," Greer told CNBC. "We're comfortable with where we are."
Canada Takes Step Closer to Buying 6 Saab Spy Aircraft
Canada's government has agreed a preliminary deal to buy six surveillance aircraft from Saab as part of its effort to rebuild its military and tighten security ties with Europe.
The government and the Swedish company signed a nonbinding term sheet that establishes the scope and foundation for detailed negotiations for the potential acquisition of Saab's GlobalEye platform, which would be used by the Royal Canadian Air Force to detect and deter threats in the Arctic and beyond.
The agreement doesn't constitute a contract or commitment to buy aircraft, but it does mark a concrete step after Prime Minister Mark Carney's government in late May selected Saab as the preferred supplier for a future airborne early-warning and control capability.
Largo Shares Slide on Pricing of $5.7 Million Offering
Largo shares fell sharply after the company priced its $5.7 million offering below recent trading prices.
Shares dropped 22.7% in Toronto to C$0.75.
The vanadium producer on Friday said it would offer 10.2 million units at a price of 56 cents apiece.
National Bank of Canada Board Authorizes Buyback of 2.6% of Public Float
National Bank of Canada intends to launch a share-repurchase program to buy back up to 2.6% of its shares for cancellation.
The Canadian lender said that its board has authorized a normal course issuer bid to buy back up to 10 million shares for cancellation for a maximum of C$2.25 billion.
The company can begin buying back the shares starting Oct. 9.
TALKING POINT
Brookfield Has an Enviable Record of Boosting Profits. Its Stock Looks Cheap.
By Andrew Bary, Barron's
Brookfield is one of the world's largest alternative-asset managers with a strategy inspired by Berkshire Hathaway that has produced 30 years of impressive profit growth and shareholder returns.
It is based in Toronto and isn't in U.S. equity indexes. Brookfield doesn't get the attention of major U.S. alternative managers like Blackstone, KKR, and Apollo Global Management, even though it manages over $1 trillion and is a leader in renewable energy, infrastructure, real estate, private credit, and insurance. Its market value of $90 billion exceeds that of KKR and Apollo.
Brookfield's U.S-listed shares look appealing after falling 20% this year to about $37 (all figures are in U.S. dollars)-little more than they fetched five years ago. The stock hit a 52-week low on Thursday.
The company is valued at just 55% of its recent estimate of its asset value and a reasonable 13 times projected 2026 distributable earnings, a cash-flow metric also used by U.S. alternative managers.
"Brookfield has a differentiated portfolio geared toward hard assets and is positioned for success," says Bart Dziarski, an analyst at RBC Capital Markets. Brookfield is his top pick among the major alternative managers, and he carries a price target of $61 a share.
Another big shareholder is billionaire investor Bill Ackman's firm. He told investors in one of his Pershing Square funds in August that Brookfield traded at a "low multiple," given its "growth and business quality."
One of Brookfield's best investments was the purchase through one of its funds of what is now a 51% stake in Westinghouse, the leading provider of nuclear services to the utility industry. Westinghouse could be worth $50 billion in a potential initial public offering later this year. It was valued at just $8 billion (including debt) when Canadian uranium company Cameco joined with Brookfield in the investment in 2023. Another score was SpaceX. Brookfield directly put $325 million into SpaceX and now owns $1.3 billion of stock, after selling $200 million of shares-a more than fourfold return on its original investment.
Brookfield recently held its annual investor day. The asset manager put its current "plan value," or the value of all its investments minus debts, at $67 a share-at nearly double its current share price. Brookfield projected that number would rise to $140 a share by 2031. Its goal is to generate 15% annualized shareholder returns.
It also projected that its core distributable earnings would rise to almost $5 a share in 2031, nearly double the 2026 Street projection. Brookfield added that it could top $7 a share if investment performance is strong and it intelligently allocates capital.
The company has delivered in the past. Since 1996, its share price has risen at an 19% annual clip while earnings have risen at a 13% rate.
Brookfield President Nick Goodman recently said the stock "offers a very attractive opportunity" for investors and a "very large margin of safety."
Brookfield has a complex structure and likens itself to Berkshire Hathaway by investing alongside its clients in public and private vehicles, while holding on its balance sheet a fast-growing insurance business, Brookfield Wealth Solutions.
Brookfield also owns a valuable real estate portfolio including Manhattan office buildings near Hudson Yards, downtown at Brookfield Place, and at Canary Wharf in London.
How does Brookfield come to value itself at $67 a share? It does a sum-of-the-parts analysis of its key businesses.
The bulk of the value, roughly $31 a share, consists of stakes in a group of publicly traded Brookfield entities, notably a 73% interest in Brookfield Asset Management, which conducts much of its investment activities.
Other notable parts are a wholly owned insurance business valued at $13 a share, real estate at $12 a share, and various direct investments in Brookfield funds worth $5 a share. The company carries about $18 billion of debt and other obligations.
So, why does Brookfield trade at such a discount to the company's estimate of net asset value?
The alt industry has fallen from favor with investors this year amid concerns about whether future returns can match historical ones, greater competition for deals, and higher interest rates, which raise borrowing costs and tend to reduce the value of real estate portfolios. Brookfield has less exposure than its peers to private credit, another investor worry.
Some might question the assumptions in the Brookfield NAV calculation, including its valuation of $14 a share on its carried interest-or incentive profits-on its funds. RBC's Dziarski made more-conservative assumptions for the value of carried interest and the insurance business and came up with a $56 a share NAV, still nearly $20 above the current stock price.
As Warren Buffett did at Berkshire, Brookfield's management takes its earnings and allocates capital to the most promising investments.
With growth comes risk, and CEO Bruce Flatt addressed that at the investor day, saying that investors might worry that with "lots of growth...you're going to blow your brains out.'
He kept going. "Just to be clear, we've been doing this a long time. We try to make small mistakes, not big ones. We grow methodically."
Brookfield isn't returning much cash to its shareholders, with a sub-1% dividend yield and about $1 billion of annual stock buybacks, or just 1% of its market value.
CEO Flatt was pressed by analysts at the investor day about why buybacks aren't larger. He replied that the company is prioritizing "exciting" investments, particularly in its insurance platform.
Two potential positives for Brookfield are its plan to redomicile in Bermuda, and move to GAAP accounting next year from International Financial Reporting Standards, or IFRS. This could position the company to enter the S&P 500 index in 2028 and make it easier to compare Brookfield to its U.S. rivals.
Brookfield has built one of the best investment management platforms in the world, and investors can buy it on the cheap.