We recently published a list of 10 Worst Blue Chip Stocks to Buy. In this article, we are going to take a look at where KKR & Co. Inc. (NYSE:KKR) stands against other worst blue chip stocks to buy.
As per Niamh Brodie-Machura, Co-Chief Investment Officer at Fidelity International, the effect of tariffs is expected to shift lower as and when the deals are made, supply chains adapt, and there is some adjustment in consumption patterns with lower tariffed goods witnessing relatively increased demand. However, there continues to be a period of increased volatility, and investors who plan to add risk should be careful. The environment is more of an opportunity to better position portfolios for resilience amidst uncertainty.
Market Rotation and Opportunity Areas
Contrary to expectations, BlackRock, in its release dated April 23, highlighted that international equities outperformed the US equities by 11% in 2025. The US growth stocks fell by 10%, and US value stocks increased by 2%. This transition demonstrates a significant market rotation throughout geography and style as value stocks continue to gain favor over growth stocks. Within the US market, value equities, mainly in defensive sectors such as healthcare, have been performing well, says the asset manager.
BlackRock also added that the narrowing of the earnings gap and the industry’s attractive characteristics, like innovation and the growth of aging populations, have been fueling the performance. Notably, active management strategies are advantageous when it comes to navigating the fluctuating markets.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Should Investors Do?
BlackRock believes that the US large-cap value equities are the only major US index having positive returns YTD through March 31. Among the value equities, its investors are spotting opportunities in defensive sectors. In the current fast-moving political environment, primarily new trade policies, value equities can possess an additional tailwind. This stems from their ability to fetch a greater share of revenue from the US.
Elsewhere, if tariff discussions continue longer than expected or the average tariff rates differ from the current expectations, it is important to make portfolio changes accordingly, says Fiduciary Trust (a privately held wealth management firm). Notably, the capex spending on AI is expected to remain strong, and AI will likely fuel long-term productivity. The firm also opines that changes will be made to bank capital ratio rules, enabling them to enhance lending and/or increase stock buybacks. Both of these measures can improve earnings.
Our Methodology
To list the 10 Worst Blue Chip Stocks to Buy, we scanned through the holdings of SPDR® S&P 500® ETF Trust and chose the ones that declined between 15%-30% on a YTD basis. After getting an extended list of stocks, we selected the ones popular among hedge funds. Finally, the stocks were ranked in ascending order of their hedge fund holdings, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A modern looking financial adviser sitting in front of a trading monitor, gesturing to a group of investors.
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.”
Overall, KKR ranks 4th on our list of worst blue chip stocks to buy. While we acknowledge the potential of KKR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than KKR but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
