Tue, Feb. 10, 9:16 AM
Tue, Feb. 10, 8:43 AM
- Q4 economic net income of $86.6M down from $786.6M one year ago. ENI after taxes per unit of $0.05 vs. $1.04 a year ago.
- Private Markets revenue fell to $283.4M in Q4 from $1.013.7B a year ago, mostly thanks to markdowns on the company's energy investments. The portfolio appreciated 2.7% during the Q, but energy holdings were marked to about $0.76 on the dollar vs. $1.14 at the end of Q3.
- The dividend is cut to $0.35 per unit vs. a recent $0.45.
- Conference call at 10 ET
- Previously: KKR misses by $0.40, misses on revenue (Feb. 10)
- KKR -4.9% premarket
Tue, Jan. 6, 2:38 PM
- One of today's worst-performing sectors as oil tumbles below $48 per barrel is private-equity. It was late last year Blackstone's Steven Schwarzman told investors he was itching to buy into the dive in energy, a promise he made good on in the first session of this year. In general one would think the plunge is a good thing for the opportunistic types who manage these companies.
- In late December, it was estimated buyout firms had lost a combined $11.7B in 27 publicly traded oil producers since June, and that was with oil nearly $10 higher than it is today.
- ETFs: PSP, PEX
- Other individual names: KKR (KKR -2.1%), Fortress Investment (FIG -2.7%), Apollo Global (APO -3.5%), Oaktree (OAK -3.9%), The Carlyle Group (CG -2.8%), Ares Management (ARES -1.8%).
Dec. 4, 2014, 10:19 AM
- In private-equity, Blackstone (BX +1.4%) and KKR & Co. (KKR +0.9%) post gains after being initiated with Overweight ratings, while Carlyle Group (CG -1%) and Oaktree Capital (OAK -0.5%) are started at Equal Weight.
- Moving onto traditional asset managers, Invesco (IVZ -0.5%) is rated Overweight, while T. Rowe Price (TROW -0.3%), Legg Mason (LM -1.5%), Franklin Resources (BEN -0.9%), and BlackRock (BLK -0.2%) are all started at Equal Weight.
Oct. 23, 2014, 8:37 AM
- Economic net income of $508.7M vs. $613.7M one year ago. ENI after taxes per unit of $0.50 vs. $0.80.
- Distributable earnings of $504.8M vs. $251.1M a year ago thanks to fast pace of realizations. Distribution per unit of $0.45 vs. $0.23.
- Private Markets AUM of $59.2B. Segment revenues of $631.6M vs. $788.5M a year ago. ENI of $399M vs. $531.8M. Lower investment income and a lower level of appreciation (up 2.2% for the Q) in the portfolio drove the declines.
- Public Markets AUM of $37B. Segment revenues of $93.6M vs. $83.5M a year ago thanks to higher management fees reflecting new capital raised. ENI of $48.1M vs. $37.6M.
- Capital Market revenues of $93.4M vs. $58M a year ago thanks to a greater level of deals. ENI of $61.6M vs. $44.4M.
- ROE of 24.7% during quarter.
- Conference call at 10 ET
- Previously: KKR beats by $0.06, beats on revenue
- KKR +3% premarket
May 22, 2014, 10:09 AM
- In response to inquiries from the WSJ, KKR (KKR -2.8%) says it erroneously listed in-house consulting unit KKR Capstone as a subsidiary in its 2011 annual report. Additionally, several KKR-controlled public companies wrongly described Capstone as a KKR "affiliate" in regulatory filings, and statements on investor calls identifying Capstone's lead executive as a KKR partner were "technically incorrect."
- The admissions raise a ticklish legal issue as KKR is required to share with investors in its largest buyout fund 80% of any "consulting fees" earned by any KKR affiliate. Capstone has earned the bulk of about $170M in consulting fees reported by KKR over the past three years, but the P-E firm says the unit is owned by Capstone management, not KKR. As Capstone isn't an affiliate, according to KKR, it's consulting fees don't have to be shared with investors.
- This fee-sharing issue is being raised as the SEC ramps up its own probe of fees and disclosures in the P-E industry.
Apr. 24, 2014, 12:03 PM
- KKR Financial (KFN +3.2%) reported Q1 earnings yesterday after the bell, but the stock is ahead because of a 3%-plus gain at KKR which reported its results earlier this morning.
- Previously: Surging markets boost KKR
- Previously: KKR Financial Holdings LLC misses by $0.02
- KKR expects its acquisition of KKR Financial to close sometime this quarter. KFN owners will receive 0.51 shares of KKR for each share of KFN they own.
Apr. 24, 2014, 8:31 AM
- Economic net income of $630.3M falls from $647.7M one year ago, but distributable earnings of $446.8M are up 54% Y/Y as buoyant stock markets made it a good time to harvest. IPOs in Q1: Pets at Home, Santander Consumer USA. Share sales in companies already public: Jazz Pharma and Nielsen. Realized carried interest of $168.8M nearly doubles from last year's $88.1M.
- The carrying value of the P-E portfolio rose 4.5% in Q1 vs. 5.9% one year ago (Blackstone's rose 7% in 2014 Q1).
- CC at 10 ET
- Press release, Q1 results
- KKR +1.1% premarket
Apr. 3, 2014, 10:54 AM
- Acknowledging the Street is already way long the stocks, Bernstein nevertheless starts coverage of Apollo Global (APO), Blackstone (BX), and KKR with Outperform ratings, noting P/E multiples of 11x for alternatives is way below that of traditional asset managers at 16x (a fact also noted by Blackstone's Stephen Schwarzman).
- At current valuations, says analyst Luke Montgomery, investors are paying only for cash flows from existing funds and get the going-concern value and any positives from yet-to-be-launched funds for free. "More important, they get a free option on the significant growth opportunities we see for these firms."
- “Their advantage is extremely difficult to replicate, which means these firms have a large halo effect and are operating in a league of their own with little competition in their path. Meanwhile, the larger scale of these firms is generating outsized cash flow that is supporting a push into higher growth, less scale-constrained strategies, like credit and real estate."
- Apollo is Montgomery's "Credit Growth Play," while Blackstone is "The Innovation as Cycle Muting Play," and KKR is "The Economies of Skill Play." If he had to pick from among the three, it would be KKR given valuation and its differentiated strategy.
- Previously: Positive P-E sector coverage launched at Bernstein
- Related ETFs: PSP, PEX
Feb. 6, 2014, 9:15 AM
Dec. 17, 2013, 12:45 PM
Dec. 17, 2013, 9:11 AM
Dec. 16, 2013, 5:42 PM
Dec. 16, 2013, 5:03 PM
- The stock-for-stock acquisition in which KFN shareholders will receive 0.51 common units of KKR for each share of KFN they own values the company at $2.6B or $12.79 per share, based on today's KKR close of $25.08.
- KKR's book value is expected to growth to $9.3B from $7.2B, and book value per adjusted unit will grow to $11.34 from $10.07. The transaction is expected to be accretive to both the size of KKR's distribution per unit as well as the predictable and recurring component of future distributions. Integration risk is minimal as KFN's assets are already managed by KKR.
- The deal is currently a 35% premium to today's close for KFN and amounts to 1.15x book value.
- The boards of both companies have approved the merger.
- KFN +31%, KKR +1.7% AH
- Press release
Oct. 24, 2013, 9:12 AM
Oct. 24, 2013, 9:08 AM
- Slashing his FY13 EPS estimate to $1.37 from $1.63 and his FY14 estimate to $1.07 from $1.43, analyst Scott Valentin, remarks on the challenges of transitioning earnings from steady high-yielding bank loan and high-yield interest income to lower-yielding CLOs, and less-predictable high-return investment income.
- He does expect the $0.22 quarterly dividend to remain safe, but sees little in the way of growth. "The shift in strategy to more highly visible cash flow investments, while reducing earnings volatility, will most likely result in lower returns than the targeted 10-year Treasury + 1000 bps."
- He expects the stock to trade close to $10.42 book value while investors take a wait-and-see approach on the new strategy.
- Last night: Q3 results and earnings call transcript.
- KFN -8% premarket to $10.
- Management from call: "At this point the three areas we are focused on for new capital commitments are CLO equity, opportunistic credits and then a new, a related area, specialty financed lending."
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