KKR & Co. Inc.

(New York Stock Exchange)
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Bullish +65

Why KKR & Co (KKR) is an Incredible Growth Stock

AI-generated analysis

πŸ“ˆ Greenhaven Road Capital identifies KKR & Co. (NYSE: KKR) as a top stock pick due to its resilience during the global pandemic.

πŸ’° KKR possesses a fortress-like balance sheet with cash and investments covering nearly half of its current share price.

πŸ—οΈ The company has deployed over $12 billion in capital for major acquisitions across three different countries and industries.

🀝 On July 8, KKR announced an agreement to purchase insurance company Global Atlantic to expand its permanent capital base.

πŸ’΅ KKR has actively raised more than $10 billion during the pandemic, maintaining a capital base exceeding $200 billion.

πŸ“‰ Hedge fund bullish positions on KKR decreased by approximately 14% in Q1 2020 compared to the prior quarter.

πŸš€ Management fees and incentive fees are projected to march higher as the balance sheet compounds over time.

🌍 The firm operates with a highly variable cost structure, providing flexibility during economic downturns.

Bullish Signals
  • KKR has a fortress-like balance sheet with cash and investments covering almost half of its share price, providing significant financial stability.
  • The company successfully executed large-scale transactions in three different countries and industries, including the purchase of Coty's beauty business and a takeover of MasMovil Ibercom.
  • KKR announced the acquisition of Global Atlantic on July 8, which is expected to dramatically increase its permanent capital base.
  • Management has been aggressive in investing over $12 billion during the pandemic while simultaneously raising more than $10 billion in new capital.
  • The firm benefits from secular tailwinds in private equity and a highly variable cost structure that allows for resilience during market volatility.
Risk Factors
  • Hedge fund sentiment turned cautious in Q1 2020, with bullish positions on KKR stock decreasing by about 14% from the previous quarter.
  • KKR is not currently ranked among the 30 most popular stocks held by hedge funds, indicating a lack of consensus among institutional investors.
Full Analysis
Greenhaven Road Capital's Q2 2020 Investor Letter highlights KKR & Co. (NYSE: KKR) as a resilient investment, noting the firm's fortress-like balance sheet with cash and investments covering nearly half its share price. The letter emphasizes KKR's ability to execute large-scale transactions across diverse industries and countries during the pandemic, citing deals like the purchase of Coty's beauty business, a carve-out from Pennon, and a takeover of MasMovil Ibercom. The firm also announced an agreement on July 8 to acquire insurance company Global Atlantic, a move expected to significantly increase its permanent capital base. Management has been aggressive in deploying over $12 billion in capital, while simultaneously raising more than $10 billion during the pandemic, leveraging scale and expertise in a private equity market with secular tailwinds. Despite bullish sentiment from Greenhaven Road Capital, hedge fund data shows a 14% decrease in bullish positions on KKR stock in Q1 2020 compared to the previous quarter. The article suggests that while some investors dismiss hedge funds due to past performance narratives, KKR's financial strength and strategic positioning offer a compelling case for growth amidst market volatility. The analysis concludes that KKR's balance sheet will compound over time, driving higher management and incentive fees, which should lead to increased earnings. The firm is positioned to capitalize on high single-digit return targets in an environment of negative interest rates and public market volatility.