Greenhaven Road Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. The Fund returned approximately -26.5% net in the first quarter. Individual returns will vary by class and date of investment. Against a backdrop of rising rates, investors continued to shun “growth” companies during the first quarter. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Greenhaven Road Capital mentioned KKR & Co. Inc. (NYSE:KKR) and explained its insights for the company. Founded in 1976, KKR & Co. Inc. (NYSE:KKR) is a New York, New York-based private equity company with a $45.1 billion market capitalization. KKR & Co. Inc. (NYSE:KKR) delivered a -28.86% return since the beginning of the year, while its 12-month returns are down by -6.43%. The stock closed at $53.00 per share on April 25, 2022.
Here is what Greenhaven Road Capital has to say about KKR & Co. Inc. (NYSE:KKR) in its Q1 2022 investor letter:
“KKR (KKR) – Let’s look at our investment in the private equity firm KKR through the lenses of rising rates, rising oil prices, and conflict in Ukraine. Keep in mind, KKR was down more than 20% in Q1. KKR has close to zero revenue or holdings in Russia or Ukraine. The war is a human tragedy but does not impact the durability of KKR’s asset management business. Regarding the impact of higher oil prices, a weakened consumer may be bad in the short term, but this is in part off set by the massive $100B+ pile of “dry powder” that KKR has available to invest on weakness in the economy and the markets. As for rising interest rates, one could argue that because KKR uses debt to finance some of their private equity deals, rising rates make it harder to do new deals and make the debt more burdensome for existing holdings. That said, when you look at the mix of funds they manage and their investment strategies, rising rates are a manageable headwind that may impact the structure of some future deals. Rising rates will not grind the investment process to a stop, and they will be a tailwind for the capital markets business. In my opinion, for our investment in KKR to be successful, we do not have to believe that there will be peace in Ukraine, low oil, or low rates.
What we do have to believe is that KKR will continue to attract assets and maintain an economic structure that does not just reward employees, but shareholders (us) as well. From an asset-gathering perspective, I believe KKR is as strong as ever. The recent volatility only makes their private funds more attractive to large allocators for whom the muted volatility of private investments extends personal career longevity. A recent Goldman Sachs survey confirmed that private equity is an area where investors expect to increase their allocation in 2022. In addition, KKR is expanding distribution by opening their funds up to a larger base of retail investors. The fundraising parade is alive and well…” (Click here to see the full text)
Our calculations show that KKR & Co. Inc. (NYSE:KKR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. KKR & Co. Inc. (NYSE:KKR) was in 55 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 56 funds in the previous quarter. KKR & Co. Inc. (NYSE:KKR) delivered a -18.16% return in the past 3 months.
In March 2022, we also shared another hedge fund’s views on KKR & Co. Inc. (NYSE:KKR) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
