⚠ Buying the Mix Is Not the Same as Earning ItHigh threat

BlackRock (BLK) — threat to the moat

Equity rose 42% in two years, return on equity fell to 10.7%, and reported earnings per share went down on revenue up 19%.

The improvement in BlackRock's fee mix over the past three years is real, and most of it was purchased. Global Infrastructure Partners, HPS Investment Partners, Preqin and ElmTree together added several hundred billion dollars of the well-paid kind of assets and a genuine private-markets franchise.

Return on equity vs 9% cost of equityWACC ~9%16.2%202113.7%202214.3%202314.7%202410.7%2025Equity went from $39.3bn to $55.9bn in two years, almost all goodwill and intangibles
A decade in a 13-16% band, then a step down as the acquisitions landed on the balance sheet before their earnings did.

The bill is on the balance sheet. Shareholders' equity went from $39.3 billion at the end of 2023 to $55.9 billion at the end of 20251 — a 42% increase, nearly all of it goodwill and intangibles. Return on equity, which had held between 13% and 16% for a decade, fell to 10.7% in 20252.

And reported earnings per share fell, from $42.01 to $35.313, in a year when revenue rose 19%. The mechanism is the HPS consideration: paid substantially in Class B-2 units of a consolidated subsidiary that are exchangeable one-for-one into BlackRock stock4, so the earnings attributable to those units sit outside net income while the revenue they generate sits inside it. On the as-adjusted basis, which assumes every unit is exchanged, the same year reads $43.61 to $48.095.

The as-adjusted figure is the more economically meaningful one, and it is also the one that assumes full dilution — meaning the earnings are there and so are the shares. Diluted shares including the Subco units were 164.6 million in the second quarter of 2026 against 156.3 million a year earlier6.

What would settle this is time. If the private-markets business compounds, the goodwill was well spent and the return on equity climbs back. If it does not, BlackRock will have paid $30 billion of stock for a fee mix that the market has already begun repricing anyway.

References
  1. ReportedShareholders' equity went from $39.3 billion at the end of 2023 to $55.9 billion at the end of 2025 — a 42% increase, nearly all of it goodwill and intangibles
    BlackRock, Inc. Form 10-K, FY2025, consolidated financial statements — revenue $24,216M (2024 $20,407M, 2023 $17,859M, 2022 $17,873M, 2021 $19,374M); base fees and securities lending $19,179M / $16,100M / $14,399M; performance fees $1,424M / $1,207M / $554M; technology services and subscription $1,981M / $1,603M / $1,485M; distribution fees $1,355M / $1,273M / $1,262M; advisory and other $277M / $224M / $159M; operating income $7,045M at a 29.1% margin (2024 37.1%, 2023 35.1%, 2022 35.7%, 2021 38.5%); net income $5,553M (2024 $6,369M); diluted earnings per share $35.31 (2024 $42.01, 2023 $36.51, 2022 $33.97, 2021 $38.22); as adjusted, operating income $9,600M at 44.1%, net income $7,736M and diluted EPS $48.09 against $43.61; total stockholders' equity $55,888M (2024 $47,495M, 2023 $39,347M) — FY2025 · publ. February 2026 · source ↗
  2. Moat Explorer calcReturn on equity, which had held between 13% and 16% for a decade, fell to 10.7% in 2025
    BlackRock, Inc. Form 10-K, FY2025, consolidated financial statements — revenue $24,216M (2024 $20,407M, 2023 $17,859M, 2022 $17,873M, 2021 $19,374M); base fees and securities lending $19,179M / $16,100M / $14,399M; performance fees $1,424M / $1,207M / $554M; technology services and subscription $1,981M / $1,603M / $1,485M; distribution fees $1,355M / $1,273M / $1,262M; advisory and other $277M / $224M / $159M; operating income $7,045M at a 29.1% margin (2024 37.1%, 2023 35.1%, 2022 35.7%, 2021 38.5%); net income $5,553M (2024 $6,369M); diluted earnings per share $35.31 (2024 $42.01, 2023 $36.51, 2022 $33.97, 2021 $38.22); as adjusted, operating income $9,600M at 44.1%, net income $7,736M and diluted EPS $48.09 against $43.61; total stockholders' equity $55,888M (2024 $47,495M, 2023 $39,347M) — FY2025 · publ. February 2026 · source ↗
  3. ReportedAnd reported earnings per share fell, from $42.01 to $35.31, in a year when revenue rose 19%
    BlackRock, Inc. Form 10-K, FY2025, consolidated financial statements — revenue $24,216M (2024 $20,407M, 2023 $17,859M, 2022 $17,873M, 2021 $19,374M); base fees and securities lending $19,179M / $16,100M / $14,399M; performance fees $1,424M / $1,207M / $554M; technology services and subscription $1,981M / $1,603M / $1,485M; distribution fees $1,355M / $1,273M / $1,262M; advisory and other $277M / $224M / $159M; operating income $7,045M at a 29.1% margin (2024 37.1%, 2023 35.1%, 2022 35.7%, 2021 38.5%); net income $5,553M (2024 $6,369M); diluted earnings per share $35.31 (2024 $42.01, 2023 $36.51, 2022 $33.97, 2021 $38.22); as adjusted, operating income $9,600M at 44.1%, net income $7,736M and diluted EPS $48.09 against $43.61; total stockholders' equity $55,888M (2024 $47,495M, 2023 $39,347M) — FY2025 · publ. February 2026 · source ↗
  4. ReportedThe mechanism is the HPS consideration: paid substantially in Class B-2 units of a consolidated subsidiary that are exchangeable one-for-one into BlackRock stock, so the earnings attributable to those units sit outside net...
    BlackRock, Inc. Form 10-K, FY2025, acquisitions and equity — Aperio (approximately $41 billion of AUM, February 2021), Kreos (approximately $2 billion, August 2023), SpiderRock (approximately $4 billion, May 2024), Global Infrastructure Partners (approximately $70 billion, October 2024), Preqin (March 2025), HPS Investment Partners (approximately $118 billion, closed 1 July 2025) and ElmTree (approximately $3 billion, September 2025); the HPS consideration was paid substantially in Class B-2 common units of a consolidated subsidiary, BlackRock Saturn Subco, LLC, "which are exchangeable on a one-for-one basis into common stock of the registrant", with 7,614,515 such units included in the fully diluted share count on the cover of the Form 10-K — FY2025 · publ. February 2026 · source ↗
  5. ReportedOn the as-adjusted basis, which assumes every unit is exchanged, the same year reads $43.61 to $48.09
    BlackRock, Inc. Form 10-K, FY2025, consolidated financial statements — revenue $24,216M (2024 $20,407M, 2023 $17,859M, 2022 $17,873M, 2021 $19,374M); base fees and securities lending $19,179M / $16,100M / $14,399M; performance fees $1,424M / $1,207M / $554M; technology services and subscription $1,981M / $1,603M / $1,485M; distribution fees $1,355M / $1,273M / $1,262M; advisory and other $277M / $224M / $159M; operating income $7,045M at a 29.1% margin (2024 37.1%, 2023 35.1%, 2022 35.7%, 2021 38.5%); net income $5,553M (2024 $6,369M); diluted earnings per share $35.31 (2024 $42.01, 2023 $36.51, 2022 $33.97, 2021 $38.22); as adjusted, operating income $9,600M at 44.1%, net income $7,736M and diluted EPS $48.09 against $43.61; total stockholders' equity $55,888M (2024 $47,495M, 2023 $39,347M) — FY2025 · publ. February 2026 · source ↗
  6. ReportedDiluted shares including the Subco units were 164.6 million in the second quarter of 2026 against 156.3 million a year earlier
    BlackRock, Inc. Form 10-Q, quarter ended 30 June 2026 — assets under management $15.3 trillion at 30 June 2026 against $13.9 trillion at 31 March; revenue $7,084M against $5,423M a year earlier, base fees and securities lending $5,726M, performance fees $305M against $94M, technology services and subscription $566M; operating income $2,461M against $1,731M; net income attributable to BlackRock $1,914M and diluted earnings per share $12.19 against $10.19; diluted shares including Subco Units 164.6 million against 156.3 million; long-term net inflows of $199 billion in the quarter, of which ETFs $178 billion, retail $19 billion and institutional $2 billion; six months revenue $13,782M, operating income $5,275M, net income $4,126M and diluted EPS $26.25, including a $538M reduction in the fair value of contingent consideration; 154,996,807 shares of common stock outstanding; total assets $175,875M and BlackRock stockholders' equity $57,613M; approximately 26,200 employees — Q2 2026 · publ. August 2026 · source ↗
Sources
Generated September 23, 2026