According to Reuters, KKR & Co. L.P. (NYSE:KKR) could be one of the companies that bails out beleaguered Takata Corp. Takata’s defective airbag inflators have led to tens-of-millions of vehicle recalls, substantial write-downs among vehicle manufacturers, and several major lawsuits being filed against it. Takata shares have understandably cratered and KKR could be one of the companies to benefit. According to Japan’s Nikkei newspaper, KKR proposed buying a 60% stake in the company and would benefit if the equity portion survives the bad publicity and fallout of the scandal. Other investors may also be interested and no deal has been finalized yet. Shares of KKR have slipped by 0.32% this morning, while shares of Takata surged by 21% on the Tokyo Stock Exchange, the maximum daily limit allowed on that exchange.
KKR & Co. L.P. (NYSE:KKR) has experienced an increase in activity from the world’s largest hedge funds in recent months. At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 17% gain from one quarter earlier. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Domino’s Pizza, Inc. (NYSE:DPZ), Torchmark Corporation (NYSE:TMK), and Leggett & Platt, Inc. (NYSE:LEG) to gather more data points.
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Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest call position in KKR & Co. L.P. (NYSE:KKR), worth close to $82.3 million, amounting to 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Thomas E. Claugus of GMT Capital, with a $65 million position; 1.6% of his fund’s 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include Clearbridge’s Legg Mason Capital Management, John A. Levin’s Levin Capital Strategies, and Jody LaNasa and Vivian Lau’s Serengeti Asset Management.
On the next page we’ll look at some funds that took up positions in KKR during Q1, as well as compare the stock to a handful of others with similar market caps.
With general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd into KKR in Q1. Select Equity Group created the most valuable position in KKR & Co. L.P. (NYSE:KKR), having $82.3 million invested in the company at the end of the quarter. Gregg J. Powers’ Private Capital Management also made a $13.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel Gold’s QVT Financial, Serengeti Asset Management, and Jim Chanos’ Kynikos.
Let’s also examine hedge fund activity in other stocks similar to KKR & Co. L.P. (NYSE:KKR). These stocks are Domino’s Pizza, Inc. (NYSE:DPZ), Torchmark Corporation (NYSE:TMK), Leggett & Platt, Inc. (NYSE:LEG), and Apartment Investment and Management Co. (NYSE:AIV). This group of stocks’ market values resemble KKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DPZ | 32 | 1116741 | 12 |
| TMK | 21 | 525581 | 1 |
| LEG | 19 | 180347 | 2 |
| AIV | 18 | 170167 | 5 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $498 million. That figure was $504 million in KKR’s case. Domino’s Pizza, Inc. (NYSE:DPZ) is the most popular stock in this table. On the other hand Apartment Investment and Management Co. (NYSE:AIV) is the least popular one with only 18 bullish hedge fund positions. KKR & Co. L.P. (NYSE:KKR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DPZ might be a better candidate to consider a long position in.
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