Brookfield Posts Record 2025 Results Amid Persistent Valuation and Regulatory Concerns

What happened

Brookfield Asset Management announced record 2025 financial results, including $35 billion in Q4 fundraising and 28% year-over-year growth in fee-related earnings, alongside a 15% dividend increase and the appointment of Connor Teskey as CEO. These figures highlight the strength of the asset management platform, which drives distributable earnings for parent company Brookfield Corporation. However, the DeepValue report cautions that BN's current $47 share price already reflects high-teens DE growth, despite thin accounting profitability and high leverage with a net debt-to-EBITDA ratio of 7.53x. Moreover, the report notes that part of this growth stems from intra-group transactions with BN-controlled insurers, raising regulatory risks that could undermine the Wealth Solutions engine. Thus, while the news reinforces operational momentum, it does not alleviate core concerns about valuation sustainability and potential regulatory headwinds.

Implication

Investors should interpret the record fundraising and earnings growth as positive signals of demand for alternative assets, supporting near-term distributable earnings. However, the dividend increase and operational successes are likely already priced in at $47, limiting immediate upside from current levels. The CEO appointment at the asset management arm may bring fresh leadership but does not address underlying issues like high leverage and controversial intra-group insurance transactions. Critical monitoring is essential for regulatory actions or fundraising slowdowns, as these pose significant downside risks to the 20%+ DE growth target. Overall, implications suggest maintaining a cautious stance with better entry points near $38, as per the report's attractive entry level.

Thesis delta

The thesis remains unchanged: Brookfield Corporation is a fully valued compounder with embedded risks that the new results do not materially alter. While the record performance provides incremental confidence in the growth trajectory, it does not shift the risk-reward balance, as regulatory scrutiny and high leverage persist. Investors should continue to wait for a pullback toward $38 or clearer evidence that fundraising momentum and insurance platform growth are sustainable without regulatory pushback.