We recently published a list entitled Billionaire Israel Englander’s Top 10 Stock Picks for 2024. Since KKR & Co. Inc. (NYSE:KKR) ranks 7th in the list, it deserves a deeper look.
Billionaire Israel Englander is one of the most notable hedge fund managers in America. He founded Millennium Management back in 1989. Today, the fund’s portfolio is worth over $234 billion. Englander nabbed the top spot in Bloomberg’s list of highest-earning hedge fund managers in 2023, with a whopping $2.8 billion in net earnings including gains from personal investments and fees. Earlier this year, Bloomberg reported that Izzy Englander’s Millennium Management earned $600 million from commodities investments last year. However, in a separate report, the publication said despite installing a new chief of its commodities and making big changes, Millennium’s commodities business is lagging behind Citadel (of billionaire Ken Griffin) which made a whopping $8 billion from commodities in 2022. Bloomberg said, citing sources, that part of the reason why Millennium is struggling to post big gains is billionaire Englander’s imposition of “tight guardrails” to limit losses. To make money in the commodities business, experts say, you have to take risks and give some freedom to traders. But Englander likes to be in control. A Financial Times report earlier this year said Millennium Management manages a whopping $60 billion in assets, employs 5,400 people and has 17 offices. Yet Englander owns 100% of the firm.
The report said, citing a person who works at the fund, that this major concentration is “not a good idea.”
The FT report said Englander’s fund was up 8.3% in 2023 through October, while it returned 12.5% in 2022, 13.6% in 2021 and an impressive 25.9% in 2020.
For this article, we scanned Millennium Management’s Q1 portfolio and picked the fund’s top 10 holdings. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Israel Englander of Millennium Management
KKR & Co. Inc. (NYSE:KKR)
Billionaire Israel Englander’s Stake Value: $921,662,818
Billionaire Israel Englander decreased his stake in KKR & Co. Inc. (NYSE:KKR) by 3% in the first quarter of 2024, closing the quarter with a $921 million stake in the company. KKR & Co. Inc. (NYSE:KKR) shares have gained about 81% over the past one year as investors flock to private equity and alternative investments as stock markets become volatile by the day. At its investor day event in April, KKR & Co. Inc. (NYSE:KKR) management said the company expects its adjusted EPS to double from current level by 2026 in the range of $7.00 to $8.00 per share. Over a 10-year horizon, Adj. EPS will reach $15, almost 5 times the current value. KKR & Co. Inc. (NYSE:KKR) also expects to rake in $300 million in dividend income by 2026.
KKR & Co. Inc. (NYSE:KKR) is trading at a forward PEG ratio of 0.82, lower than the sector median of 1.14. The stock is trading at around 16.28X its 6.11 EPS estimate for 2025 set by Wall Street. With expected revenue growth in 2025 at 32.30% and earnings growth of 29.70%, KKR & Co. Inc. (NYSE:KKR) appears to be an undervalued play. Average analyst price estimate for KKR & Co. Inc. (NYSE:KKR) is $118, which presents an 18% upside potential from the current levels.
Vulcan Value Partners stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its first quarter 2024 investor letter:
“KKR & Co. Inc. (NYSE:KKR), a large alternative investment manager, continues to execute well and was a material contributor for the second consecutive quarter. The company reported increased fundraising during the quarter and macro factors are becoming more favorable for the firm. We continue to believe that KKR is well-positioned for the future.”
Overall, KKR & Co. Inc. (NYSE:KKR) ranks 7th on Insider Monkey’s list of Billionaire Israel Englander’s Top 10 Stock Picks for 2024. You can visit Billionaire Israel Englander’s Top 10 Stock Picks for 2024 to see other stocks in the list. While we acknowledge the potential of KKR & Co. Inc. (NYSE:KKR), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KKR & Co. Inc. (NYSE:KKR) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
