Moon Capital Management, LLC, an investment management company, released its fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The majority of experts believed two years ago that a U.S. recession might be approaching within the next twelve months. Two years later, however, the economy has managed to escape contraction, inflation is under control, profit margins are strong, and investor confidence has returned. The S&P 500 has also generated its best two-year return since 1998, the year before the Internet investment bubble burst, with a 23% gain in 2024. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Moon Capital Management highlighted stocks like KKR & Co. Inc. (NYSE:KKR) in the fourth quarter 2024 investor letter. KKR & Co. Inc. (NYSE:KKR) is an equity and real estate investment firm. The one-month return of KKR & Co. Inc. (NYSE:KKR) was -4.82%, and its shares gained 81.07% of their value over the last 52 weeks. On January 8, 2025, KKR & Co. Inc. (NYSE:KKR) stock closed at $148.24 per share with a market capitalization of $136.796 billion.
Moon Capital Management stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its Q4 2024 investor letter:
“We recently sold our shares in global private equity giant KKR & Co. Inc. (NYSE:KKR) at $153 per share. Our initial investment in the company dates back to 2018, when the stock was trading around $20 per share. At that time, KKR’s net cash and investments comprised approximately 65% of its market price (over $13 per share). These investments had been compounding at a mid-teens rate and had more than doubled in value since the start of the decade. The remaining $7 per share of enterprise value reflected the fee-related earnings, which were predominantly recurring, given that 73% of KKR’s assets under management (AUM) were locked in for over eight years.
KKR is a prime example of a successful investment that, with the benefit of hindsight, was so obviously underpriced, that our profit almost seems like free money.
Our initial purchase price in 2018 implied a valuation of less than 5x earnings for this fee-based business. Additionally, we saw a free option on future carried interest – a lumpy yet highly valuable and growing residual. At the time, KKR had raised more capital in the prior 12 months than in any other period in its history. Conservatively valuing the base management fees at 10x earnings, we estimated the company’s intrinsic value at a per-share figure in the low $30s…” (Click here to read the full text)
A modern looking financial adviser sitting in front of a trading monitor, gesturing to a group of investors.
KKR & Co. Inc. (NYSE:KKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the third quarter which was 75 in the previous quarter. While we acknowledge the potential of KKR & Co. Inc. (NYSE:KKR) as an investment, 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed KKR & Co. Inc. (NYSE:KKR) and shared Delaware Ivy Core Equity Fund’s views on the company in the previous quarter. KKR & Co. Inc. (NYSE:KKR) was a top performer of RiverPark Large Growth Fund in the third quarter after reporting strong quarterly results. In addition, please check out our hedge fund investor letters Q4 2024 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.