We recently compiled a list of the Top 10 Stocks to Buy According to Lone Pine Capital. In this article, we are going to take a look at where KKR & Co. Inc. (NYSE:KKR) stands against the other stocks.
Lone Pine Capital, established in 1997 by Stephen Mandel, is a leading hedge fund and investment advisory firm based in Greenwich, Connecticut. The firm also operates offices in major financial hubs, including London, New York City, and San Francisco. Over the years, Lone Pine Capital has built a strong reputation in the investment world, focusing on long-term growth strategies. The firm’s disciplined approach to stock selection and asset management has enabled it to maintain a significant presence in the hedge fund industry.
Stephen Mandel, the founder of the firm, has had an extensive career in finance even before launching Lone Pine Capital. He previously worked as a managing director at Tiger Management, gaining valuable experience in investment strategy. A graduate of Dartmouth College with a degree in government, Mandel later earned an MBA from Harvard University. His expertise and leadership led to his ranking in the highest-earning categories among Forbes’ top hedge fund managers multiple times between 2012 and 2018. Although Mandel stepped away from active investment management in 2019, he continues to serve as a managing director at the firm. As of Q4 2024, Lone Pine Capital managed nearly $13.5 billion in 13F securities spread across 30 companies, with its top 10 holdings accounting for 55.89% of its portfolio.
Lone Pine Capital’s investment philosophy is rooted in identifying transformative changes that can unlock or accelerate value. By leveraging institutional knowledge and deep expertise across sectors and global markets, the firm continuously reassesses its investment theses and uncovers new opportunities. It strategically times market entry by recognizing key turning points in economic and industry cycles, allowing it to capitalize on shifts before they become widely apparent. The firm also prioritizes long-term value creation, typically holding investments for two to three years, though it has held stocks of certain companies for decades. This disciplined approach aligns investment timelines with investor expectations, optimizing returns. Additionally, Lone Pine Capital remains highly responsive to innovation in various forms—whether through technological advancements, business model evolution, or leadership changes—adapting its strategies based on emerging data and shifting market dynamics.
Moreover, the hedge fund’s investment strategies are designed to achieve long-term capital appreciation through a disciplined and research-driven approach. For its long-only strategy, the firm focuses on high-conviction investments in companies with strong growth potential, maintaining a diversified portfolio primarily across North America and Europe while limiting exposure to emerging markets. Its long/short equity strategy follows a similar approach, combining concentrated long positions with a diversified selection of short investments to navigate market fluctuations effectively. Net exposure varies based on market conditions and available opportunities, ensuring flexibility in positioning. In private investments, the firm applies its extensive research capabilities to identify promising companies in sectors such as software, financial technology, healthcare, and consumer markets. By targeting capital-efficient businesses with significant public market potential, Lone Pine Capital seeks to maximize returns through selective, high-impact investments.
Our Methodology
The stocks discussed below were picked from Lone Pine Capital’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A modern looking financial adviser sitting in front of a trading monitor, gesturing to a group of investors.
KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders as of Q4: 83
Lone Pine Capital’s Equity Stake: $598.76 Million
KKR & Co. Inc. (NYSE:KKR), a global leader in private equity and investment management, recently reported a mixed fourth-quarter performance, with assets under management rising 15% to $638 billion yet falling short of analyst expectations of $643.4 billion. This shortfall led to an 8.5% drop in KKR’s stock price, despite an impressive 78.5% gain in 2024. Analysts suggest the decline may be driven by concerns over slowing growth and profit-taking following the stock’s strong performance. KKR & Co. Inc. (NYSE:KKR) remains optimistic about its long-term trajectory, setting a target of surpassing $1 trillion in assets within the next five years. Despite challenges, KKR’s capital markets division performed well, generating $270 million in transaction fees for the quarter, primarily from private equity and infrastructure investments. For the full year, the division achieved a milestone, bringing in $1 billion in revenue for the first time.
KKR & Co. Inc. (NYSE:KKR)’s financial performance was impressive for Q4 2024, with adjusted net income surging 33% to $1.19 billion, or $1.32 per share, surpassing estimates of $1.28 per share. The firm’s infrastructure funds posted a 2% gain, while its opportunistic real estate funds rose 1%. However, its private equity portfolio remained flat in the fourth quarter, reflecting some challenges in the broader investment landscape. The company remains well-positioned for future growth, as analysts highlight a more favorable business environment under the Trump administration, which could facilitate deal-making and investment exits. Despite recent volatility, KKR’s track record of strong returns and strategic asset allocation continues to support its long-term outlook.
Looking ahead, KKR & Co. Inc. (NYSE:KKR) plans to expand its stakes in USI Insurance Services, 1-800 Contacts, and Heartland Dental, with a combined investment of approximately $1.1 billion. The firm now anticipates generating over $350 million in operating earnings from this unit by 2026, with annual projections exceeding $1.1 billion by 2030. In recent months, the company has actively pursued new opportunities, including the acquisition of a 25% stake in Italian energy giant Eni’s biofuel business, Enilive, for 2.94 billion euros, further strengthening its diverse portfolio.
Vulcan Value Partners stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its Q4 2024 investor letter:
“During the quarter, we sold KKR & Co. and InterContinental Hotels Group. We owned KKR & Co. Inc. (NYSE:KKR) for over six years. During that time, the company converted from a publicly traded partnership to a C corp, and both its value and stock price compounded at strong mid double-digit rates. KKR’s stock price reached our estimate of fair value and following our discipline, we sold it because we no longer had a margin of safety and reallocated capital into more discounted companies with attractive margins of safety.”
Overall KKR ranks 10th on our list of the stocks to buy according to Lone Pine Capital. While we acknowledge the potential for KKR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than 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.
