KKR

KKR & Co LP

Finance/Real Estate


Presented:07/18/2016
Price:$13.06
Cap:$5.88B
Current Price:$135.78
Cap:$120.50B

Presented

Date07/18/2016
Price$13.06
Market Cap$5.88B
Ent Value$31.18B
P/E RatioN/A
Book Value$11.29
Div Yield0%
Shares O/S450.26M
Ave Daily Vol2,717,796
Short Int0.85%

Current

Price$135.78
Market Cap$120.50B
KKR & Co. LP provides investment and private equity asset management services. It operates business through three business segments: Private Markets, Public Markets and Capital Markets & Other. The Private Markets segment is comprised of the global private equity business, which manages and sponsors a group of investment funds and vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. The Public Markets segment is comprised primarily of the company fixed income businesses which manage capital in liquid credit strategies, such as leveraged loans and high yield bonds, and less liquid credit products, such as mezzanine debt, special situation assets, rescue financings, distressed assets, debtor-in-possession financings and exit financings. The Capital Markets & Other segment combines the assets acquired in the Combination Transaction with the company's global capital markets business. The company was founded by Henry R. Kravis and George R. Roberts on June 25, 2007 and is headquartered in New York, NY.

Publicly traded companies mentioned herein: Blackstone Group LP (BX), First Data Corp (FDC), KKR & Co LP (KKR)

Highlights

The presenter views KKR as a good franchise in a secularly attractive business. The stock price has been “pummeled” over the past 12 months (-43%) due to the perception that the franchise is broken following losses amounting to $1 per share over the last four quarters. The losses were all on the balance sheet and over the same time frame the private equity funds are up 9%. He is long the stock and views the risk/ reward as very favorable in the low teens ($13.50 is just 6x KKR’s average annual cash earnings over the past five years). As earnings recover - and he thinks “the market just needs to see a couple of quarters in a row with $0.50/ share of earnings” - the stock price should respond relatively quickly and trade up to the $18 - $19 range (which is still just 8x KKR’s normalized earnings power of $2.25).

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Idea Discussion

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