BlackRock Market Cap
I'm sure you guys must have heard about BlackRock controlling the world from different YouTube videos or other sources. Yet it's market cap is less than 100 Billion. Google, Apple and a few other have 1 Trillion+ Market cap, which is more than 10x. Does BlackRock really have that much control over the world as what is perceived? If yes why is it's valuation so low? What kind of influence does the company actually have?
majboormajdoor
Stealth
a year ago
It has no influence. It is an asset manager. All it gets is proxy votes for the unit holders of its schemes.
Just because a security guard gets all the keys does mean he has influence over the entire Tech Park.
The analogy makes sense, we'll put. At a high level what kind of doors can BlackRock open that others can't?
majboormajdoor
Stealth
a year ago
Recently they have taken an ESG stance. Have voted on a lot of green projects. They have also showed some shareholder activism, despite being passive investor. But they are not a shareholder, merely a custodian.
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Sugar
Stealth
a year ago
Blackrock is an advisory firm, It gives advice to clients where to put money, how to hedge and deals in various financial instruments. It isn't a bank which has it's own money so obviously valuation is low but when you compare the valuation ratio's within similar group of companies it's pretty high.
Also fyi the AUM of blackrock is around $8.59 Trillion, to put this in perspective Indian GDP is $3.18 Trillion
So Blackrock controls money indirectly, they don't take in money directly and manage(This type of model has it's advantages and disadvantages)
Hmm but how exactly does that work. I can see BlackRock owning around 5% of Google. If the clients don't directly provide the money to BlackRock how is it managed under their name?
Sorry if this is a dumb question I've just recently started getting into finance related stuff ...😄
Sugar
Stealth
a year ago
Blackrock says 'We manage money on behalf of our clients' whereas someone running a fund just takes money and invest and a bank has it's own assets
On behalf : you can do lot of shady things(Hindenburg never disclosed their clients)
Running a fund : you have to disclose everything.
That doesn't mean Blackrock doesn't run funds
Even for someone running a fund, it isn't their money so it isn't their asset, it is just 'asset under management'
Also There is this popular misconception among people that parent company should be valued higher. But it isn't the case, let's say Blackrock owns 10% of Trillion dollar company, so it has assets of $100 Billion, but when black rock has to monetize that money, how much will it be worth...? $100 Billion...?, the answer should be NO, why..?, TAX. After taxation It would be worth far lesser than $100 Billion. So basically all parents companies will be valued far lesser than the companies they own(you can check any listed ones, same case everywhere)
Think of it like this, If you are in investing in parent company it means you are betting on investor who is betting on a company(2nd order investing).
If I invest on you who is betting on investor who is betting on a company, it's 3rd order, so you will be far less valued than the company. Why..?..because at every stage there is leakage(Tax, operational expenses,...)
If I value you and company at same level, why should I invest in you(3rd order), I can directly put that money in the company right
Value = perspective
(lol mamaearth coming with IPO at 10k cr valuation, earlier it was 24k cr)
Blackrock's power comes from their ability to dictate terms to clients not the valuation
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I'd recommend you check the entity structure once. "BlackRock Inc" is listed, check how much does it own/control. It might be just one advisory company of theirs.
Beware of all these conspiracy theories propagating online. Initially you'll think you are getting aware of hidden knowledge but it's all fabricated extreme opinions which will create fear in your mind and fuck it up.
Have seen a friend go almost mad because he went too much down the rabbit hole, believing everything he read online from illuminati conspiracy theories, to wef to covid to bill gates to red pill. A lot of it are legitimate concerns like wef/covid but the nature of social media is to post extreme narratives to get the attention of emotional minds.
