Phenomenal article, Javier. Really enjoy your work.
Do you have any thoughts on Brookfield, the complexity behind their accounts, and the optically disturbing related party/intra-group transactions that they engage in?
Thanks a lot for the kind words—really appreciate you reading and engaging!
Your question on Brookfield hits right at the core of the article’s theme: when complexity is baked into the business model, where does healthy structure end and obfuscation begin?
Brookfield is a fascinating case because, on one hand, the nature of their business practically requires complexity. You’re dealing with dozens of listed and unlisted entities, multi-level capital structures, fee streams across the corporate stack, and hundreds of billions in assets—across real estate, infrastructure, renewables, private credit, and more. In that context, intra-group transactions and related-party flows are inevitable.
But that doesn’t mean we should ignore the risks.
Yes, some of the intra-entity movements—asset sales between entities, delayed divestments, partial monetizations—can create optical effects on earnings, NAVs, or cash flows. It’s fair to say Brookfield sometimes dances at the edge of what should be done. And sure, you could argue some of this serves to smooth results, shift capital around, or delay recognition of unfavorable outcomes.
Does that make it a fraud? No. Does it make it transparent? Also no.
Investing in a company like Brookfield ultimately requires a degree of trust—in management’s incentives, in their long-term alignment with shareholders, and in their capital allocation discipline. But that trust shouldn’t be blind. It’s exactly why diversification matters, and why one should never treat a GP-like compounder as a black box that always “compounds.”
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Great research, great study cases! Appreciate it, thank you Javier! Cheers!
Phenomenal article, Javier. Really enjoy your work.
Do you have any thoughts on Brookfield, the complexity behind their accounts, and the optically disturbing related party/intra-group transactions that they engage in?
Thanks a lot for the kind words—really appreciate you reading and engaging!
Your question on Brookfield hits right at the core of the article’s theme: when complexity is baked into the business model, where does healthy structure end and obfuscation begin?
Brookfield is a fascinating case because, on one hand, the nature of their business practically requires complexity. You’re dealing with dozens of listed and unlisted entities, multi-level capital structures, fee streams across the corporate stack, and hundreds of billions in assets—across real estate, infrastructure, renewables, private credit, and more. In that context, intra-group transactions and related-party flows are inevitable.
But that doesn’t mean we should ignore the risks.
Yes, some of the intra-entity movements—asset sales between entities, delayed divestments, partial monetizations—can create optical effects on earnings, NAVs, or cash flows. It’s fair to say Brookfield sometimes dances at the edge of what should be done. And sure, you could argue some of this serves to smooth results, shift capital around, or delay recognition of unfavorable outcomes.
Does that make it a fraud? No. Does it make it transparent? Also no.
Investing in a company like Brookfield ultimately requires a degree of trust—in management’s incentives, in their long-term alignment with shareholders, and in their capital allocation discipline. But that trust shouldn’t be blind. It’s exactly why diversification matters, and why one should never treat a GP-like compounder as a black box that always “compounds.”