Brookfield Corporation (TSX:BN) stock took a beating this week, falling 10.3% in price in a matter of days. The likely culprit was the Canada-U.S. trade war that has been underway ever since Donald Trump became U.S. president and which heated up this week when Trump’s tariffs took effect. Brookfield exports various forms of energy to the U.S., chiefly through its subsidiary Brookfield Renewable Partners (TSX:BEP.UN). So, it’s arguably in Trump’s line of fire.
It could be that investors sold Brookfield stock, fearing that Brookfield Renewable Partners’s earnings would take a hit from Trump’s tariffs — although, in that case, it’s odd that BEP itself sold off much less than BN did this week. Another possibility is that investors got concerned about the company’s interest rate sensitivity — it has a lot of debt, albeit widely distributed across many subsidiaries.
So, is the newly cheap Brookfield stock a buy in 2025? That depends on what the year has in store for the company. Brookfield has delivered an excellent long-term compounding track record, and its subsidiary Brookfield Asset Management (TSX:BAM) has $115 billion worth of client money to invest. Once invested, that money should generate an additional $550 million worth of fee-related income for Brookfield Asset Management, 75% of which will flow through to Brookfield Corp.
So, there is considerable potential for Brookfield stock to deliver in 2025.
Brookfield Renewable
One area with potential for Brookfield is in its Brookfield Renewable Partners subsidiary. That unit has a deal with Microsoft to supply the latter 10.5 gigawatts of clean power. The deal has the potential to generate billions of dollars worth of revenue over four years. This deal has not begun generating revenue for Brookfield Renewable Partners yet, so the financial impact of it is in the future. It appears likely that Brookfield could get some earnings growth out of this deal.
Brookfield Asset Management
Brookfield Asset Management’s $115 billion worth of committed but un-invested capital is another asset that could help Brookfield going forward. If the money is invested and Brookfield charges 0.5% annual management fees, then the committed capital will generate $575 million in annual fee-related income. That’s by my own calculations; I’ve read elsewhere that the amount of fees will be $550 million per year. Either way, it’s a nice boost to Brookfield’s bottom line.
Insurance
Last but not least, we have insurance. This business is one of Brookfield’s biggest growth engines, and management apparently has big plans for it. In a recent interview, Brookfield chief executive officer Bruce Flatt said that Brookfield has been investing heavily in insurance, plowing $20 billion into it. He even went so far as to say that the insurance unit may end up owning most of the rest of the company’s operations. He then went on to compare this operation to the structure of Berkshire Hathaway, a company that compounded investors’ wealth at 20% per year for 60 years. So, there is a lot of potential here if Flatt makes good on his promise.
The bottom line
The bottom line is that Brookfield has a lot of things going for it in 2025. A big renewable deal, $115 billion in committed capital, and ambitious plans to become the next Berkshire Hathaway. Overall, the outlook is sunny.
