Bruce Flatt (Brookfield): “Being Contrarian And Not Being Where The Crowd Is Going – Is Hard To Do – But The Most Lucrative If Accomplished”

Here’s a great presentation from Bruce Flatt, CEO of Brookfield Asset Management, speaking to the folks at Google about – Durable Principles for Real Asset Investing. Flatt makes some great points on the importance of going against the crowd and maintaining a contrarian approach to investing saying:

“We’ve always tried to adhere to the strategy that being contrarian and not being where the crowd is going – is hard to do – but the most lucrative if accomplished.”

Here’s an excerpt from his presentation:

To give you an overview of the investment principles for real asset investing that we follow within Brookfield. I would say that over the years we didn’t have any secret sauce and we had no strategy really when we started. I would say it was based on a value thesis and over the years we’ve tried to learn and develop a strategy that worked for us.

The number one thing that I would say to anyone that is investing is that there’s never a right strategy. It’s whatever strategy fits yourself and what you want to do. So I’d start off with that. For us though we generally have always operated in a methodology where we’re trying to walk away from the cliff.

One should always look for opportunity away from where the crowd is going and not go with the crowd. In real asset investing that’s a very important lesson to learn.

Fifteen or twenty years ago we wrote down the investment guidelines that we had for the company. Ever so slightly over the years those have changed but largely they are the same:

The first one is to identify places where we have a competitive advantage and invest in those areas.

Second, always try to invest on a value basis. Go away from where the people are going and invest where other capital is not. We found that very important to investing in real assets.

Third, what we’re looking to do is to buy assets or find assets that have cash flow inherent in them, or we can build the cash flows within the business. So they may not have cash flow day one. You may have an office building and you may just have a piece of land but inherently it’s in a good place where you can build it to generate cash flow.

Lastly, I guess we’ve always tried to adhere to the strategy that being contrarian and not being where the crowd is going – is hard to do – but the most lucrative if accomplished.

Here’s the full presentation: