This Metric Says You Are Smart to Buy KKR & Co. L.P. (KKR)

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Now, according to many traders, hedge funds are viewed as useless, old financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading in present day, Insider Monkey focuses on the aristocrats of this group, about 525 funds. It is assumed that this group has its hands on the lion’s share of the smart money’s total capital, and by keeping an eye on their highest performing equity investments, we’ve deciphered a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as crucial, optimistic insider trading sentiment is another way to analyze the stock market universe. There are plenty of motivations for an executive to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).

Furthermore, it’s important to examine the recent info for KKR & Co. L.P. (NYSE:KKR).


How have hedgies been trading KKR & Co. L.P. (NYSE:KKR)?

At Q2’s end, a total of 25 of the hedge funds we track were bullish in this stock, a change of 9% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly.

Out of the hedge funds we follow, Ariel Investments, managed by John W. Rogers, holds the most valuable position in KKR & Co. L.P. (NYSE:KKR). Ariel Investments has a $140.8 million position in the stock, comprising 2.3% of its 13F portfolio. On Ariel Investments’s heels is GMT Capital, managed by Thomas E. Claugus, which held a $85.3 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other peers that are bullish include Richard Chilton’s Chilton Investment Company, Leon Cooperman’s Omega Advisors and Jim Simons’s Renaissance Technologies.

As aggregate interest spiked, particular hedge funds were leading the bulls’ herd. Ariel Investments, managed by John W. Rogers, created the most outsized position in KKR & Co. L.P. (NYSE:KKR). Ariel Investments had 140.8 million invested in the company at the end of the quarter. Thomas E. Claugus’s GMT Capital also made a $85.3 million investment in the stock during the quarter. The other funds with brand new KKR positions are Richard Chilton’s Chilton Investment Company, Leon Cooperman’s Omega Advisors, and Jim Simons’s Renaissance Technologies.

What do corporate executives and insiders think about KKR & Co. L.P. (NYSE:KKR)?

Insider buying made by high-level executives is best served when the company in question has seen transactions within the past six months. Over the last half-year time frame, KKR & Co. L.P. (NYSE:KKR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to KKR & Co. L.P. (NYSE:KKR). These stocks are American Capital Ltd. (NASDAQ:ACAS), Waddell & Reed Financial, Inc. (NYSE:WDR), Lazard Ltd (NYSE:LAZ), Legg Mason, Inc. (NYSE:LM), and Och-Ziff Capital Management Group LLC (NYSE:OZM). This group of stocks are the members of the asset management industry and their market caps resemble KKR’s market cap.

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