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The Barbarians At The Gate At A Discount

|Includes:KKR (KKR), KKR

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KFN was a long idea that started in August 2009 at a price of under $2.50. It was trading at a massive discount to NAV at the time. Our analysis indicated that it was worth more than twice the market price. We thought that there was about a 70% chance that it would reach its NAV of $5.69. Here are the early results:

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Another separate but affiliated KKR investment vehicle that was also an investment idea of ours, KKR Private Equity Investors, has already been absorbed into KKR. Earlier this week, KKR announced that they are buying KFN for KKR stock. We support the deal and assume that a majority of KFN holders will too. The deal should close by the end of May 2014 and the $0.48 net spread implies an annual net return of slightly above 8%.

Stocks: KKR, KKR