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KKR still in the chips despite bum Energy Future investment

  • KKR is suffering a "black eye" over its investment in headed-for-bankruptcy Energy Future Holdings, but - says Oppenheimer's Chris Kotowski - other investments in that 2006 flagship fund are doing fine and should lead to further gains.
  • Among them are Capsugel, Biomet, and Go Daddy. Then there's "works in progress" like First Data and Samson where marks have already been taken, but KKR - traditionally conservative in its marks - is working to improve the situation. Kotowski thinks if the fund were liquidated at current prices, it would generate $0.89 in earnings per share.
  • "The news is not always good, but KKR seems to take the bitter medicine early when it needs to," says Kotowski ... [We] think KKR is the best organic growth story in the [P-E] group because it has used its balance sheet investments to fund numerous first generation funds in Energy, Infrastructure, Real Estate, Credit and long/short equities."
Comments (4)
  • BAUER
    , contributor
    Comments (13) | Send Message
     
    As shareholder of KKR I wish good luck to this super Co.
    8 Mar 2014, 01:33 PM Reply Like
  • hotmix
    , contributor
    Comments (79) | Send Message
     
    Long On KKR , like Mr. Kotowski. stated "They took their medicine early , " They seam "to have been their done that" In the past knowing what to look for.
    10 Mar 2014, 02:51 PM Reply Like
  • frumenti
    , contributor
    Comments (9) | Send Message
     
    Graduated from SMU with business degree with High Honors. CPA with KPMG for 5 years. CFO for Pay Less Drug Stores for 20 years during which company had a compound growth rate of growth EPS of 18%. Led several acquisitions including successful unfriendly tender offer which doubled the size of the company. Personally worked with George Roberts, Henry Kravis and Jerry Kolberg of KKR in an effort take the company private. Led sale of Pay Less to Kmart. Hired as CFO for Egghead Software a few months after Egghead had gone public. Discovered $2,000,000 inventory shortage and personally released the information to the public. Then turned around bad situation in the computer department by firing Arthur Anderson and cancelling two IBM computers which were the largest IBM was making at the time. I was added to the Egghead Board of Directors which included Paul Allen co-founder of Microsoft. Egghead recovered and had another public stock offering after I left to purchase a private company.
    31 May 2014, 11:38 AM Reply Like
  • frumenti
    , contributor
    Comments (9) | Send Message
     
    I am long 1,000 shares plus 30 call contracts and a 22 strike price with 1/15/2016
    expiry. My knowledge of the KKR organization goes back more than 30 years when I worked with them on a leveraged buy out. I believe they have developed an outstanding organization over the years with offices in New York, Houston, Washington DC, Menlo Park, Calgary, Sao Paulo, London, Paris, Dubai, Riyadh, Madrid, Hong Kong Bejing, Seoul, Tokyo, Mumbai, Sydney, Singapore, San Francisco, Louisville and Dublin. Why do I think it important to include such a long list? The world has moved closer to the American way of doing business and even the leadership in China realizes that taxes on wealth creation can produce vast amounts of tax money for the government in Bejing compared to money from ownership of businesses by the state. KKR is well positioned to capitalize on
    the future development of the rest of the world. China and Vietnam's corporate tax rate are both 25% and are communist countries. What does that tell you when the US corporate tax rate is 40%? The world is waking up to the importance of businesses operating at a profit.

     

    If the VA relied on non Federal Government institutions to care for our Vets it would be cheaper and a better job would be done. When a private company does a poor job it goes out of business. When a government agency does a poor job it gets more tax money. Recent news has shown that the Federal Government can't do anything right and that is good for free enterprise and a good lesson for the American people and free enterprise.

     

    KKR is a growth company paying a big dividend and growth companies paying a decent dividend are rare. This company will be a core investment for me.

     

    KKR has announced it will build up the balance sheet with direct investments which moves the company more in the direction of the Buffett style company. I believe the management of KKR is just as skilled as Buffett in picking companies and and perhaps better at managing them as Buffett given the stress added to a buyout company's large addition of debt in a leveraged buy out. KKR's return on equity is
    29% which is better than Berkshire-Hathway

     

    KKR management emphasizes the importance of "alignment of interests" of everyone that invests money in a particular venture. That doesn't mean everyone will make the same amount of money; that is determined by each investor's role but everyone who invests will benefit if the company does well. The importance of this idea cannot be over emphasized.
    31 May 2014, 02:02 PM Reply Like
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