Today’s examination of Brookfield Infrastructure Partnerships L.P. (BIP.UN TSX) will conclude the assignment from Tat. On Friday I conducted an analysis of Brookfield Asset Management Inc. (BAM.A TSX) as the first phase of a comparative analysis.
BIP.UN manages a portfolio of infrastructure assets including utilities, energy, transportation, and communications facilities. Investments made on behalf of unit holders are characterized by stable cash flows, high margins, and strong internal growth properties. Management is constantly looking for deals that meet their qualifications and they are disciplined enough to maintain their investment policy. The yield on distributions is 4.73% and management expects annual distribution growth of 5 to 9 %.
An inspection of the charts will help determine the trend, support, and resistance related to BIP.UN and how it compares to BAM.A.
The three-year chart portrays units that caught an aggressive bounce off the 52-week low of $40.94 in October of 2014. The advance took the units to a 52-week high of $58.63 by April of 2015 but they have since pulled back and are testing support at $53.00. The MACD and the RSI generated sell signals in February and again in April as the units were topping out. Since May $56.00 has provided a hurdle that BIP.UN has not been able to overcome.
The six-month chart delineates a range bound pattern with support at $53.00 and resistance at $56.00. The momentum indicators are not providing enough evidence that investors can expect a new advance until the range bound pattern is resolved.
When comparing BAM.A to BIP.UN we are looking at two different types of investments. BAM.A generates a lower yield but higher growth. BIP.UN offers a higher yield but lower growth. From a long term perspective both of these investments have the royal jelly of focused and disciplined management.
When push comes to shove thats what separates the wheat from the chaff. I’ll never forget the video of James Bruce Flatt on the ground in New York right after 9/11. He was there to see what was required to get his customers through the disaster. That my friend is leadership.
I would suggest splitting your investable capital and buying both but picking away at them over a longer accumulation period.
Next time I will investigate the charts of Teck Resources Ltd. (TCK.B TSX) for Cheryl.
Make it a profitable day and happy capitalism!