I may be making a mistake here, but I don't understand the valuation, even after this year's run-up.

So from this year's investor's presentation we have:

($millions) 2017 2016

Fee related earnings $ 732 $ 639

Distributions received 1,385 1,251

Realized carried interest 152 15

Total $ 2,269 $ 1,905

I believe this earning number 2.2B doesn't include the appreciation of BAM's own capital invested, it only includes the distribution from these invested capital, which is 1385M above.

In another slides it's mentioned that the total return from its own capital is 18% (5% is the distribution and 13% is capital appreciation, I assume). Even if we assume this 18% number won't sustain and assume a more realistic 5%/5% in the future and add back the capital appreciation back to the earning I get 3.6B earning power. This doesn't assume an esp rosy capital appreciation prospects, and doesn't take the carry increase potential into consideration. Compared with a 40B market cap, this seems pretty cheap (even doesn't consider a few well-know growth factors)

Any mistake in my calculation/logic?

In that $104 slide, they have a line for

carried interest and fee related interest

but no line for the 'distributions received' which is a line item on page 64...Is that included in the first two?

I see they generated 1.8 billion free cash flow today.

The 2022 prediction would be (if outflows grow a little slower and the distributions received stay the same) $2.7 billion + $1.4 billion = $3.8 billion - ~$800m outflows = $3 billion/year.

At blended average of 15x that's $45 billion in 5 years based on multiple of fcf ($40 billion today's market cap)

or at 20x = $60 billion.

It'd be nice to know what they are predicting for the distributions . But it seems but I don't see more than a double in 5 years or an 80 billion market cap either way.

Generally, I'd say a two column approach of net invested capital and some multiple of asset management fees is more appropriate. Using FCF only doesn't give them full credit for compounding invested capital as the increasing value largely doesn't show up in earnings/FCF.