Greenhaven Road Capital, an investment management company, released its third-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund declined in the third quarter, bringing the year-to-date returns to approximately -59%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Greenhaven Road Capital highlighted stocks like KKR & Co. Inc. (NYSE:KKR) in its third-quarter investor letter. Headquartered in New York, New York, KKR & Co. Inc. (NYSE:KKR) is a real estate investment and private equity firm. On November 25, 2022, KKR & Co. Inc. (NYSE:KKR) stock closed at $51.85 per share. One-month return of KKR & Co. Inc. (NYSE:KKR) was 6.40%, and its shares lost 32.41% of their value over the last 52 weeks. KKR & Co. Inc. (NYSE:KKR) has a market capitalization of $58.191 billion.
Greenhaven Road Capital made the following comment about KKR & Co. Inc. (NYSE:KKR) in its Q3 2022 investor letter:
“Private equity firm KKR & Co. Inc. (NYSE:KKR) is designed to weather an economic downturn. One-third of capital is permanent and cannot be redeemed. Over eighty percent of AUM has 8+ year lock-ups at inception, and the firm is currently sitting on over $100B in “dry powder” which means it is committed and will be called when KKR is ready to invest it (which is not up to LPs’ discretion). This capital will start paying management fees upon investment. We can argue about the likelihood and timing of KKR realizing incentive fees, but management fees are almost certainly going up as capital is called.
KKR benefits from the secular tailwinds of the continued migration to private equity. Typically, funds get successively larger and with scale comes increased profitability. The industry has grown in the teens, and KKR has grown management fees at an average of 27% per year for the past decade. On the product front, they have 30+ funds (more than 20 of which are less than 10 years old) across geographies and asset classes (private equity, credit, growth, real estate, infrastructure) and are increasingly selling to new types of clients, including insurance companies and high net worth individuals.
So, in summary, they have new funds and new geographies and are selling into new channels, all built on a base of very attractive historical returns and an excellent brand. This is a dynamic business with an enormous amount of opportunity in front of them, even if GDP shrinks by 3%. Management fees will go up as contractually committed “dry powder” capital is called, even if the ten-year bond yield rises further and parts of our economy decelerate. You don’t get fired for selecting KKR. Fundraising may slow down, but extrapolating from 2008 when KKR had far fewer products, far fewer limited partners, and far fewer channels to sell into, the market is likely not giving KKR enough credit for the progress that has been made.”
Copyright: hin255 / 123RF Stock Photo
KKR & Co. Inc. (NYSE:KKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the third quarter, which was 51 in the previous quarter.
We discussed KKR & Co. Inc. (NYSE:KKR) in another article and shared the list of stocks to buy according to James Morrow’s Callodine Capital Management. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
