Brookfield Infrastructure Partners (BIP)

Brookfield Infrastructure Partners is a high return business with attractive growth prospects and a world class management team, on the cusp of a highly attractive, transformative acquisition. Yet it is currently trading hands at roughly half of its “pro forma” NAV - implying that it’s a poorly run, low return business in terminal decline. This simply makes no sense, as any competitively entrenched financial enterprise that has the ability to consistently generate above average returns on equity (in the mid to upper teens), and can grow at mid to high single digits for the foreseeable future, should trade at or around its NAV at an absolute minimum.

Despite the positive foundation being formed through its recent BBI acquisition, the high quality assets backing BIP’s underlying value, its attractive secular growth profile (BIP sits at the center of what I believe is an emerging mega trend), and the variety of catalysts that should help bring about the realization of its underlying value…this above average business remains relatively under-followed, underappreciated, and above all, cheap.

The bottom line - With a substantial margin of safety, backed by valuable hard assets and substantial appreciation potential due to its large and growing cash generating capabilities, this is a classic low risk, high reward fat pitch. Investors in BIP at or around today’s price of $15 should earn a double or more over the next 3-5 years. Outperform.