10 Worst Blue Chip Stocks to Buy

4. KKR & Co. Inc. (NYSE:KKR)

Number of Hedge Fund Holders: 83

% Decline on a YTD Basis: ~20.8%

KKR & Co. Inc. (NYSE:KKR) is a private equity and real estate investment firm that specializes in direct and fund-of-fund investments. Michael Brown, an analyst from Wells Fargo, maintained a “Buy” rating on the company’s stock and the associated price target was $120.00. The analyst’s rating comes off the back of factors such as the launch of KKR/Capital credit interval funds, which can fuel significant inflows across the year. As per the analyst, the partnership with Capital is being regarded as a strategic move that can enhance KKR & Co. Inc. (NYSE:KKR)’s market position, while more fund offerings are expected in the future. Amidst the market volatility, monetization activities remained steady, reflecting resilience in the company’s operations.

Elsewhere, Wells Fargo remains confident in KKR & Co. Inc. (NYSE:KKR)’s ability to capitalize on the anticipated fundraising supercycle and offer growth amidst the expected positive changes in the broader investment landscape. Given the company’s healthy brand reputation, it can attract robust capital inflows, resulting in strong growth in AUM. The increased capital base can help generate higher management fees and can offer KKR & Co. Inc. (NYSE:KKR) more opportunities for attractive investments throughout its strategies. Also, its diverse product offerings and global reach can help it capture a significant share of investor capital during the supercycle.

River Road Asset Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Another positive contributor was KKR & Co. Inc. (NYSE:KKR), a leading global alternative asset manager. Institutions have sought out KKR’s dynamic investment expertise for nearly 50 years. The company’s AUM has grown at a 20% CAGR since 2011 as it has broadened its product line-up to include infrastructure, real estate, credit, and liquid strategies for the mass market. Over 90% of the company’s assets are “locked-up” for at least eight years and over 50% are perpetual. Insiders own 36% of the company, and we believe the balance sheet is rock solid with net cash and ~30% of its market cap represented by illiquid investments, that will soon begin paying material dividends to KKR.

KKR’s stock performance in Q4 was driven by exceptional growth across key metrics, with Fee Related Earnings surging 79% year over-year at an impressive 71% margin, while Total Operating Earnings grew 37%, demonstrating the increasing durability of earnings with 81% coming from recurring sources. The company’s fundraising momentum remained strong with $24B raised in the quarter ($85B year-to-date as of September 30, 2024), while assets under management (AUM) grew 18% year-over-year to record levels, driven by strength in infrastructure (growing from $13B to $77B), credit ($240B AUM), and Asia ($70B AUM). Management’s successful execution across multiple growth initiatives, including the expansion of retail products and strategic holdings, combined with improving realization opportunities and capital markets activity ($424MM in Q3), reinforces the company’s path to potentially significant earnings growth with management projecting potential adjusted net income of $7 per share by 2026. We maintained the position.”