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Is KKR and Co. Inc. (KKR) A Smart Long-Term Buy?

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·3 min read
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1 Main Capital, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. A net return of 18.3% was delivered by the fund for the Q1 of 2021, ahead of its S&P 500 and Russell 2000 benchmark that delivered a 6.2% and 12.7% return respectively in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

1 Main Capital, in their Q1 2021 investor letter, mentioned KKR & Co. Inc. (NYSE: KKR) and shared their insights on the company. KKR & Co. Inc. is a New York-based private equity company that currently has a $30.8 billion market capitalization. Since the beginning of the year, KKR delivered a 37.24% return, extending its 12-month gains to 122.64%. As of April 26, 2021, the stock closed at $55.57 per share.

Here is what 1 Main Capital has to say about KKR & Co. Inc. in their Q1 2021 investor letter:

"KKR & Co (KKR) is a top three global alternative asset manager. Asset management is an exceptionally good business for those that can gather assets. Basically, clients put up most of the capital and the managers get to keep a nice chunk of the profits.

KKR plays in the secularly growing alternative space, focusing on private equity, real estate, infrastructure, and private credit, among other areas. As a leader in its field, KKR benefits from two durable trends:

1. More and more assets are being directed to alternatives, due to their superior return profile and lower reported volatility when compared to traditional public credit and equities.

2. Leaders in alternative asset management, like KKR, are taking market share and getting a disproportionate amount of the inflows into the space.

Given the above dynamics, KKR should be able to grow its revenue and earnings at an attractive rate for as far as the eye can see. I have shared my most recent financial KKR model here, which highlights the path to 4x growth in distributable earnings per share and a $135+ stock by 2025."

Our calculations show that KKR & Co. Inc. (NYSE: KKR) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, KKR & Co. Inc. was in 54 hedge fund portfolios, compared to 50 funds in the third quarter. KKR delivered a 41.94% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

Disclosure: None. This article is originally published at Insider Monkey.