About this blog: I have been investing for 25 years, professionally and personally. I look for stocks that have a high probability of compounding at 15% for at least 5 years with limited downside. I write these stocks up on my blog. You can find more about me, my philosophy, my mental models, and my portfolio structure on my site.
My last couple of notes (here and here) laid out how I reorganise Plan Value and how Brookfield has performed against its investor day promises over the years.
This got me thinking about how the BN discount and the valuations of the underlying assets have changed. I discuss each below but in short:
The market trusts BN’s Plan Value more than it did: the discount is narrowing.
If BN is cheap today - and I think it is - then it is because the underlying assets are cheaper, not because the discount is at record levels.
In the next few weeks I’ll publish deep dives into what Distributable Earnings is, and into BN’s two most important businesses: the asset manager BAM, and the all-consuming (literally) insurer BWS.
The discount to Plan Value
BN has reported Plan Value on a consistent basis since December 2022 when they spun out BAM. The graph below compares the share price to Plan Value on each balance sheet date, so it stops at 2a26 - it is not live. Interestingly the discount has trended down from the high 50% range to the high 30% range:
Valuations of the underlying
Part of the reason the market might be reducing the discount is that the valuations of the underlying assets have generally come down. BAM, which is the biggest listed asset in BN’s Plan Value, is roughly flat, having risen and then fallen. BBU, the smallest, is fairly flat vs earnings (but has declined fairly substantially against its infrequently-reported NAV). But BIPC and BEPC, in which BN holds about $20bn of stock, have seen their multiples of earnings decline fairly significantly. Unlike the one above, this graph is live - the last datapoint compares today’s price to 2q26 run rate earnings:
Thanks for reading - if you enjoyed reading this please like and restack, and do get in touch if you have questions.
Pete
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Decomposing the move this way answers the question most discount charts beg: a discount narrowing from the high 50s to the high 30s while BIPC and BEPC multiples compress means the two numbers converged from both ends, and a buyer today is paying more for trust in the mark while the marks themselves get cheaper. Flagging which chart is live and which stops at the balance-sheet date is a small act of hygiene most NAV pieces skip, and it changes how much weight the 30s figure can carry. The BWS deep dive is the one to read first when it comes: an insurer inside a Plan Value is where a self-reported number does the most work.