Partners Value Investments: Capturing Undervalued Asset Upside Through Strategic Brookfield Exposure

Partners Value Investments L.P. (PVF) has positioned itself as a compelling play on the recovery of Brookfield entities, with its Q1 2025 results underscoring a unique liability-driven investment model that unlocks value in volatile markets. Amid global trade uncertainties and sector rotation toward defensive assets, PVF’s concentrated exposure to Brookfield Corporation (BN) and Brookfield Asset Management Ltd. (BAM) has become a strategic advantage. Here’s why investors should act now.

The Liabilities That Drive Gains: Retractable Shares as a Catalyst

PVF’s net income surged to $24.6 million in Q1 2025, bolstered by $953 million in remeasurement gains on its retractable preferred shares. These shares, classified as liabilities due to their cash retraction feature, are marked to market based on PVF’s own Equity LP unit price. When the unit price declines—as it did by $13.71 during the quarter—this creates a paradoxical gain, as the liability’s fair value decreases. This mechanism acted as a tailwind in Q1, reversing the $214 million loss from the prior year when unit prices rose.

While adjusted earnings (excluding remeasurement impacts) dipped slightly to $30 million from $34 million, the core business remains intact. Investment income rose to $33.7 million, driven by higher dividends and valuation gains, while financing costs remained stable at $(2.4 million). The key takeaway? PVF’s structure is engineered to amplify returns when market volatility creates favorable conditions for its liability valuations.

Brookfield’s Upside: PVF’s Equity Engine

PVF’s crown jewels are its 8% stake in Brookfield Corporation (BN) and 2% in BAM, which collectively account for over $8 billion in fair value. Post-Q1, BN’s share price rose from $52.41 to $58.98, while BAM’s surged from $48.45 to $58.82 by May 20—a 12.5% and 21.3% jump, respectively. These gains reflect broader optimism about Brookfield’s global infrastructure and asset management portfolio, which benefits from rising demand for defensive assets.

PVF’s fair-value accounting ensures these price recoveries flow directly into its net asset value (NAV). With BN and BAM’s market caps now approaching $6.3 billion and $1.5 billion (as of March 31), the Partnership’s holdings are primed to appreciate further. Analysts note that Brookfield’s diversified holdings—from renewable energy to real estate—position it well for a post-tariff environment where resilient assets outperform.

Liquidity and Leverage: A Defensive Posture with Growth Legs

Despite a slight dip in net book value per Equity LP unit to $96.32 (from $102.80 at year-end), PVF’s balance sheet remains robust. Liabilities, including $6.36 billion in retractable shares and $497 million in warrant liabilities, are offset by $8.97 billion in total assets, with 87% allocated to Brookfield equity. Crucially, the Partnership has reduced its equity units outstanding by 3.5% through repurchases, tightening supply and boosting per-unit value potential.

Forward-looking risks, such as tariff impacts and oil price volatility, are mitigated by PVF’s focus on Brookfield’s recession-resistant sectors. The Partnership’s conservative leverage—corporate borrowings at a stable $208 million—and its ability to capitalize on retractions (should unit prices fall further) add a margin of safety.

Why Act Now?

• Structural Leverage: PVF’s liability-driven model ensures it benefits disproportionately from Brookfield’s recovery.
• Undervalued Brookfield Exposure: BN and BAM’s post-Q1 price jumps suggest the market is waking up to their value, but PVF’s stakes are still underpriced relative to their fair value.
• Sector Rotation Play: Defensive sectors like utilities and energy—where Brookfield dominates—are set to outperform as global trade tensions persist.

Final Call: PVF as the Brokerage of Brookfield’s Upside

Partners Value Investments is not just a passive holder of Brookfield shares—it’s a structured vehicle designed to amplify returns through liability dynamics and fair-value accounting. With Brookfield’s equity prices climbing post-Q1 and PVF’s NAV poised to rebound as its holdings appreciate, now is the time to secure a position. Investors seeking exposure to a resilient asset manager with strategic tailwinds should act decisively: PVF’s unique structure offers a rare chance to capitalize on undervalued equity upside without direct equity market risk.

The path forward is clear: Brookfield’s recovery is underway, and PVF’s Q1 results prove it’s already in the driver’s seat.