BLK - Embedded Expectations Analysis - 2019 04 24
BlackRock, Inc. (BLK:USA) currently trades near recent averages relative toUAFRS-based (Uniform) Earnings, with a 16.8x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management has concerns about their ability to continue returning cash to shareholders, allocate new seed and co-investment capital to projects, and maintain their AUM.
Specifically, management may lack confidence in their ability to sustain acceleration in index and ETF inflows, continue returning cash to shareholders, and modify the shape of their organization. Moreover, they may be concerned about their seed and co-investment capital allocation, and may lack confidence in their ability to sustain organic asset and base fee growth. Finally, they may be concerned about their framework for long-term growth, reductions in AUM from global equity market declines, and their share repurchase plan.
BlackRock is an investment management firm. The company provides a range of investment and technology services to institutional and retail clients worldwide. Products are provided directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares? exchange-traded funds, separate accounts, collective investment trusts and other pooled investment vehicles. The company also provides technology services, including the investment and risk management technology platform, Aladdin?, Aladdin Wealth, eFront, Cachematrix and FutureAdvisor, as well as advisory services and solutions to a base of institutional and wealth management clients.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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