DFR is Short Brookfield Infrastructure Partners
Lure of yield - aggressive accounting, overpayment of distributions, asset value inflation, and an unjustifiably high multiple create substantial downside risks for this YieldCo, in our view.
Dalrymple Finance released a critical report on Brookfield Infrastructure Partners. A companion video interview was released on Zer0es TV. It is available here on ZerOes website and on their Twitter feed.
There is a PDF attachment of the report at the bottom of this post.
In our opinion:
· The partnership has an unsustainable financial model that leads to eroding equity
· One asset carried at $1.2B or 13% of NAV is a $0.
· BIP does not cover distributions with cash available to the partnership
· The partnership trades at ~2x NAV when comparable investment vehicles trade at ~0.85x
About The Report
The report discusses issues both with BIP as an investment holding company as well as companies in its portfolio. It is a detailed report. The first 3 pages provide a summary of the thesis and key points.
Bullet points starting on page 4 provide page numbers in parenthesis directing readers to the page or pages where the topic is discussed. For example, the bullet point discussing why we believe BIP’s average payout ratio is 144% directs readers to page 56.
This report reflects an opinion based on our analysis of publicly available information. We stand to profit if unit prices decline. In no way is this report meant to be investment advice or a solicitation to buy or sell any security.
BIP’s webpage provides the names of sell-side analysts and 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.
Very interesting. Thank you for your work.