Blackstone Inc. (NYSE:BX) closed at $111.75 on October 2 and KKR & Co. Inc. (NYSE:KKR) at $90.29. Blackstone has fallen 33.04% over twelve months and KKR 28.83%, while the wider market rose about 14%.
Investors have sold them as one trade. They are no longer the same business, and the difference is larger than the shared price fall suggests.
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Blackstone Still Runs the Better Business:
On every measure of profitability, Blackstone wins, and it is not close. Blackstone converts 54.36% of revenue into operating profit. KKR manages 20.65%. That is the difference between a fee machine and a balance sheet.
Return on equity follows the same pattern, at 31.37% against 7.28%. Growth does too. Blackstone grew revenue 28.60% in the most recent quarter against 7.80% at KKR. Earnings grew 60.80% against 37.30%.
The reason is what each company chose to become. Blackstone collects management fees on committed capital and keeps the model asset-light, with $15.3 billion of debt against revenue of $15.48 billion.
KKR went a different way. It bought insurance, and the balance sheet now reflects that with $47.56 billion of cash and $56.16 billion of debt against revenue of $25.83 billion.
Insurance assets generate spread income rather than fees, and spread income earns a far lower return on the equity backing it. That is most of the gap.
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KKR Costs Far Less for What You Get:
The market is not confused about any of the above. It has priced it. KKR trades at 12.99 times next year’s estimates. Blackstone trades at 15.90 times. On book value, the gap is dramatic, at 3.06 times for KKR against 9.93 times for Blackstone.
Nearly ten times book is a price normally reserved for businesses with no capital requirements at all, which is exactly what Blackstone has engineered itself into being. It works until fundraising slows.
That is the risk both face, and it is why both fell. Private market fundraising depends on institutions having room for the asset class, and after years of allocation, it is harder to find.
Blackstone pays shareholders to wait at a 4.66% yield. KKR pays 0.8% and reinvests instead.
So the choice is between an exceptional business at a demanding price with income attached, and an ordinary one at a reasonable price without it.
There is an alternative asset manager trading below both multiples with a higher return on equity than either. You can find it in our 10 Best Stocks to Buy for High Returns Heading into 2026.
The Valuation Case:
Blackstone closed at $111.75 on October 2 and KKR at $90.29, both down heavily over twelve months while the market rose about 14%. Blackstone’s growth is the more sustainable. Fee income on committed capital recurs by design, and the gap in revenue growth shows which model compounds.
On price, KKR is the cheaper by any measure, at 12.99 times forward and 3.06 times book against 15.90 times and 9.93 times.
Set both against the rest of the sector. Apollo trades at 11.70 times forward, cheaper than either, and grew revenue 63.80% last quarter. Ares trades at 16.98 times and yields 4.59%, but at 11.02 times book it is priced even more aggressively than Blackstone. Apollo is the one making both of these look expensive.
Conclusion:
Blackstone is the better of the two. A 54.36% operating margin, a 31.37% return on equity, and revenue growing 28.60% describe a business of a quality KKR no longer matches, and the 4.66% yield pays shareholders while fundraising recovers. However, nearly ten times book value leaves no room for disappointment, and the fundraising slowdown that knocked 33.37% off the shares has not resolved. KKR is cheaper on every measure, and an investor buying it is accepting a lower-quality business in exchange for paying a third of the price to book.
Market Sentiment:
Blackstone Inc. was held by 76 hedge funds with a combined stake value of about $1.77 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 84 hedge fund holders with a cumulative investment value of around $2.02 billion in the previous quarter.
KKR & Co. Inc. was held by 77 hedge funds with a combined stake value of about $3.57 billion at the end of the same quarter. This is down from 82 hedge fund holders with a cumulative investment value of around $4.19 billion three months earlier.
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This article is originally published at Insider Monkey.
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