Abacus Global Management, Inc. (ABX) stock intrinsic value fair value estimate & owner earnings analysis

Abacus Global Management buys life insurance policies from their original owners at a discount to the eventual death benefit, holds them (or places them with institutional fund investors it manages) until they mature, and collects the difference. The company runs three related businesses: buying and holding these policies for its own account and on behalf of others (its largest source of revenue), managing roughly $3.3 billion of institutional capital in dedicated longevity funds for a management and performance fee, and licensing the actuarial technology it uses to underwrite policies. The business only reached its current form recently. It became a public company through a merger completed in 2023, took on a new credit facility in December 2024 to fund policy purchases, and only began raising outside institutional capital in its fund business in the fourth quarter of 2024. Because of that, 2023 and 2024 are not representative of the business as it runs today: 2024 in particular showed a loss driven mostly by a large, one-time round of stock compensation tied to the 2023 merger, which fell by roughly two-thirds in 2025 as those awards finished vesting. 2025 is the first year that reflects the business as it is currently structured, and it is the starting point for this analysis. A large share of the company's reported profit each year is a paper gain: an actuarial re-estimate of what a policy is worth before its owner has actually died and the death benefit has actually been collected. That gain is real accounting profit but not yet cash. In arriving at a cash-based estimate of earnings, we set aside these unrealized valuation gains and count only the cash-generating pieces: the fees the company earns on origination and portfolio servicing, the management and performance fees on its funds, and the realized gains booked when a policy actually matures and pays out. We also treat money the company spends buying new policies the way we would treat a lender growing its loan book -- a core, ongoing part of the business funded substantially by borrowed money -- rather than as day-to-day working capital, since folding it into working capital would make normal reinvestment look like it destroys cash. On that basis, cash-based owner earnings were modestly positive in 2025, at a small fraction of a dollar per share. Two developments account for the improvement from 2024: the one-time compensation charge tied to the 2023 merger continued to roll off (with about $26 million of remaining unvested awards expected to be recognized over the next couple of years), and the amount of cash actually collected from matured policies rose sharply as the portfolio purchased over the last two years began to age into maturity. Base case: assumes the pattern seen in 2025 continues at a decelerating pace over the next several years -- declining stock-based compensation, a steadily maturing (but not aggressively growing) policy portfolio producing a growing stream of realized cash gains, and management fees on the roughly $3.3 billion of capital investors have already committed to the company's funds, without assuming further success in raising new institutional capital, since that business is too new to count on. We also assume borrowing costs stay near their current level -- the company's main credit facility floats at a meaningfully higher rate than our discount rate -- through its 2030 maturity. Bear case: assumes the company's actuarial estimates of how long insureds will live prove too optimistic (a risk the company itself discloses -- medical advances that extend life expectancy beyond what was assumed when a policy was purchased would push out the cash from maturities and require additional premium payments to keep policies in force), that a large redemption window opening in one of its investment funds in early 2026 shrinks the fee-generating asset base, and that continued stock-based compensation keeps diluting shareholders faster than earnings grow. Under this case, per-share cash earnings stay close to breakeven for several years before slowly recovering. Bull case: assumes the company's underwriting turns out to be conservative rather than optimistic, so realized cash gains keep accelerating for longer, the roll-off of stock compensation happens faster than the disclosed schedule implies, and the young fund-management business continues to attract new institutional capital at something like the pace it has shown since starting in late 2024, for a few more years before that pace is assumed to slow. Putting these cases through a ten-year cash flow with a flat discount rate, and treating what happens after year ten as a continuation of the fee income already secured on committed fund capital plus a steady, non-growing stream of policy maturities, the bear case is worth roughly $0.50 a share, the base case is worth roughly $4 a share, and the bull case is worth roughly $7 a share. On debt: the company's cash-based earnings are already measured after interest expense, including a meaningful and currently expensive floating-rate credit facility, so no separate deduction for debt was made in translating business value into share value -- deducting it again would double-count the same interest cost. It is worth noting that a large part of what appears on the balance sheet as debt is not conventional borrowing at all, but the redeemable capital of outside investors in the company's own investment funds; the company says it has enough cash and marketable policies on hand to meet redemptions if investors in the fund whose redemption window opens in March 2026 choose to cash out rather than roll over. The corporate credit facility itself does not mature until December 2030, and the company reports being in compliance with its covenants. Given the young operating history, the reliance on actuarial estimates that cannot be fully verified from outside, the meaningfully leveraged and still-evolving capital structure, and the very small size of demonstrated per-share cash earnings so far, the margin-of-safety price is set at a large discount to intrinsic value, near $1.60 a share. The base case would be treated as reliable only after two consecutive years in which actual policy maturities land in line with (or better than) the company's own life-expectancy assumptions -- confirming that the paper gains booked since 2024 are converting into cash as designed. One item we could not fully reconcile from the filings: the exact split between conventional corporate borrowing and the redeemable fund-investor liabilities that make up the reported debt balance is not separately broken out in the summary disclosures we reviewed; that distinction was treated narratively rather than precisely here, and would be worth confirming directly with the company's detailed debt note in a future review.