Q: I have been a happy holder of BN/BAM but have always found it hard to measure and take the approach that they are a smart group of ppl who also own a good chunk of the company. What financial metrics do you recommend for evaluating BN ? Regular metrics like PE and ROE don't seem to work...
5i Research Answer:
BN has an impressive track record of compounding around 15% annualized returns to shareholders for decades. Regular metrics like ROE don’t apply for BN as the company owns too many reportable segments inside the corporate structure, and the profile for each varies widely such as asset management, renewable power, private equity, etc. BN’s management did report some of the custom metrics that matter to BN’s business model in its Annual Report, however, we think here are the three most important metrics investors need to keep track of like:
Growth in AUM
Growth in distributable earnings per share
Plan value per share (the estimate of intrinsic value that management believes BN’s shares are actually worth)