Pieter Slegers — Full Investment Case: KKR ("Are we buying KKR?")
A 50-page case reduced to one answer: yes. $50,000 into KKR at a $98 limit — 520 shares — on an 8.3/10 quality score, $744bn of AUM, $219bn of permanent insurance capital and a $133 sum-of-the-parts fair value.
One-line take: the deep-dive format finally ends in a purchase. KKR has been ranked on the
March,
April,
May and
June Best Buys lists and was the only name inside its limit on the
April shopping list; here the 50-page case is published and the answer is given:
"The answer is yes. We're going to add KKR to our portfolio. We'll buy the stock for $50,000 and use a limit price of $98. This means we can buy 520 shares." The case rests on three claims.
(1) Scale: $744bn of AUM across asset management, insurance and strategic holdings, "KKR can do deals that most competitors cannot… nearly 50 years, which is why CEOs and pension funds choose KKR over newer entrants."
(2) Permanent capital: $219bn through Global Atlantic — "the money from insurance premiums that KKR can invest for decades before it needs to be paid out as claims… unlike most competitors who raise fixed ten-year funds and return the money."
(3) Price: forward PE
14.9x against a five-year average of 18.0x, "below every major peer," and a sum-of-the-parts fair value of
$133 against a $97 price — a 28.3% discount. The quality score is
8.3/10, and the single number holding it down is stated rather than buried:
stock-based compensation scores 4/10, at 20.3% of adjusted net income (32.0% on the onepager's own measure) — "very high relative to their net income. But unfortunately this is an industry wide practice." Two growth engines are named: the retail
K-Series funds, which more than doubled in AUM in 2025 alone, and the
Arctos acquisition, which "adds sports investing and brings KKR closer to $1 trillion in AUM."
1. Stocks & names mentioned
Three names — one purchase and two of its own subsidiaries/acquisitions, both private. Research legend: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis. Written post with no timestamps — the At link opens the article.
| Ticker | Name | Research | View | What he said | At |
|---|
| KKR | KKR & Co. Inc. | QT · SA · STK · FA | Positive | BOUGHT — $50,000, limit price $98, 520 shares. Disclosed data: price $97, market cap $87.0bn, average daily volume $595m, ISIN US48251W1045, type Owner-Operator. Quality Score 8.3/10 across 15 metrics — highest marks for balance sheet, capital allocation and valuation (9.5/10 each), lowest for stock-based compensation (4/10, 20.3% of adjusted net income) and cyclical risk (7/10). The structure: $744bn of AUM in three linked businesses — asset management (fee income), insurance via Global Atlantic (premiums to invest), and strategic holdings (investments and dividends) — where "Global Atlantic brings in premiums that need to be invested" and KKR deploys them "into private credit, infrastructure, and real assets." Growth: revenue and adjusted net income CAGR of 35.7% and 20.0% over five years, capital raised in 2025 nearly double 2023, expected long-term EPS growth 21.1%, and management targeting a doubling of earnings in five years. Balance sheet: "the headline debt figure is mostly non-recourse debt sitting inside separate funds, meaning lenders have no claim on KKR itself." Alignment: founders Kravis and Roberts still own 18.5%, insiders 30% in total, co-CEOs Bae and Nuttall 30 years each at the firm. Valuation: forward PE 14.9x vs an 18.0x five-year average, and a sum-of-the-parts fair value of $133. Track record: +870% since 2010, a 19.2% CAGR since IPO. | read ↗ |
| private | Global Atlantic (KKR insurance arm) | — | Neutral | Not a stance — the mechanism the whole case turns on. "KKR has $219 billion in permanent capital through Global Atlantic. Permanent capital is the money from insurance premiums that KKR can invest for decades before it needs to be paid out as claims. This gives them flexibility to pursue opportunities whenever they arise." Insurance is 56.7% of segment mix against asset management's 38.2% — the insurer is now the larger half of the company. The same float argument the archive makes for Fairfax and Berkshire, applied to an asset manager. | read ↗ |
| private | Arctos Partners (acquisition) | — | Neutral | Named once, as a growth item: "The Arctos acquisition adds sports investing and brings KKR closer to $1 trillion in AUM." No price, no AUM contribution and no rationale beyond the category are given. | read ↗ |
Two figures worth flagging against each other. (1) The order arithmetic is consistent: 520 shares at the $98 limit is $50,960 — the stated $50,000 unit, and the same size used for S&P Global and Fairfax. The limit is $1 above the $97 quote, i.e. set to fill. (2) The onepager's ratio columns do not describe a normal operating company: ROIC 0.2%, ROE 8.8%, FCF yield 0.4%, gross margin 19.0% against a 33.7% five-year average. For a balance-sheet-heavy insurer/asset manager those figures are close to meaningless, which is precisely why the case is argued on sum-of-the-parts and fee-related earnings instead — but it is the reason the standard screens the archive normally leans on cannot be applied here.
2. Talking points
The answer, given in one line
- "Are we buying the company? The answer is yes. We're going to add KKR to our portfolio. We'll buy the stock for $50,000 and use a limit price of $98. This means we can buy 520 shares."
- Note the format: the entire 50-page case is published first, the conclusion is summarised for readers who will not read it, and only then the transaction. That order is unusual — most of the archive's purchases are announced before the case.
Three businesses that feed each other
- Asset Management — fee income on managed money. Insurance (Global Atlantic) — takes premiums and invests them. Strategic Holdings — compounds through investments and dividends.
- "The three businesses work together supporting the businesses as a whole. Global Atlantic brings in premiums that need to be invested. KKR invests that capital into private credit, infrastructure, and real assets."
Permanent capital as the structural edge
- "$219 billion in permanent capital… KKR always has capital to deploy, unlike most competitors who raise fixed ten-year funds and return the money."
- The advantage is timing, not cost: a fund with a fixed life must invest and exit on a calendar; permanent capital can wait. That is the same argument for insurance float made everywhere else in this archive.
Why scale is a moat here
- "At $744 billion in AUM, KKR can do deals that most competitors cannot. They have been doing this for nearly 50 years, which is why CEOs and pension funds choose KKR over newer entrants."
- The end market is described as growing structurally: "alternative assets, private credit, and insurance are all expanding, and banks pulling back from direct lending after 2008 only accelerated that shift."
The balance sheet looks worse than it is
- "The headline debt figure is mostly non-recourse debt sitting inside separate funds, meaning lenders have no claim on KKR itself. Direct corporate debt is manageable, cash is healthy, and book value has compounded at a strong rate since 2015."
- A useful general point: consolidated accounts of a fund manager include the funds, and the leverage inside them is not the manager's leverage.
The one bad score, published
- Stock-based compensation: 4/10, at 20.3% of adjusted net income. "This is very high relative to their net income. But unfortunately this is an industry wide practice."
- "SBCs are a cost for shareholders and should be treated accordingly." The archive states the principle and then buys anyway on the grounds that the whole industry does it — worth watching, because the same argument would excuse anything sector-wide.
Alignment
- Founders Kravis and Roberts still own 18.5%; insiders own 30% in total, "far above the industry norm"; co-CEOs Bae and Nuttall have each been at the firm for 30 years. Capability management scores 9/10.
Two growth engines named
- The retail K-Series funds "more than doubled in AUM in 2025 alone, opening up an entirely new pool of individual investor capital."
- Arctos — sports investing, and the step toward "$1 trillion in AUM."
- Management's own target: "double earnings in five years," i.e. roughly 15% a year, against an expected long-term EPS growth estimate of 21.1%.
Valuation, three ways
- Forward PE 14.9x against 18.0x (5-yr) and 16.0x (10-yr) — cheap versus its own history.
- "Below every major peer" — Blackstone, Carlyle and Bain Capital are the peer set given on the onepager.
- Sum-of-the-parts fair value $133 against $97, a 28.3% discount — the number the Quality Score's 9.5/10 valuation mark is built on.
3. In plain English
A jargon-free summary of the thesis behind each argued name. (Renders on each name's consolidated page.)
KKR — KKR & Co. Inc. Positive
KKR manages $744 billion of other people's money, mostly in things that are not listed on a stock exchange: whole companies, loans made directly to businesses, infrastructure, property. It gets paid a fee for managing that money, and a share of the profit when the investments do well. It has been doing this since 1976 and the two surviving founders still own 18.5% of it.
The part that makes it different from an ordinary fund manager is the insurance company it owns, Global Atlantic. Insurance customers pay premiums now and claims are paid out years later, so KKR is permanently holding about $219 billion that it can invest in the meantime. Most private-equity firms raise a fund with a ten-year life, must spend it, and must give it back; KKR has money that never has to be returned, so it can wait for the right moment instead of investing on a schedule. Insurance is now the larger half of the group.
On price, the shares change hands at about 15 times expected profits against their own five-year average of 18, and below the competition. Adding up the parts of the business separately gives a value of about $133 a share against a market price of $97. The firm's own scoring system gives it 8.3 out of 10, with the highest marks for its balance sheet, its capital allocation and its price.
The blemish is stated openly and is worth carrying: KKR pays its staff heavily in shares, worth about a fifth of adjusted profit, which quietly dilutes outside shareholders. That single item scores 4 out of 10 — the lowest of the fifteen — and it is excused on the grounds that the whole industry does it, which is a weaker defence than the rest of the case.
The transaction: $50,000, a limit of $98, 520 shares — announced before it was executed, and the fourth month running that KKR had appeared on the firm's shortlist without being bought.
Summary derived from the archived Compounding Quality post (text in transcript.txt) for personal study. Not investment advice. © Compounding Quality / Pieter Slegers for source material.