Title: Are we buying KKR? — Full Investment Case: KKR Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; signed "Team Compounding Quality") Date: 2026-06-21 URL: https://www.compoundingquality.net/p/full-investment-case-kkr Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. The on-page title is "🏦 Are we buying KKR?"; the slug is full-investment-case-kkr. The onepager and the 15-metric Quality Score are published as images and are transcribed below as [Table image — ...] blocks. The 50-page investment case itself is a separate downloadable PDF and is not part of this post.
Hi Partner
Today, you will receive a full investment case of 50 (!) pages about KKR
This is a wonderful company that definitely deserves your attention.
Happy reading!
KKR & Co - General Information
Company name: KKR & Co. Inc.
ISIN: US48251W1045
Ticker: KKR
Type: Owner-Operator Stock
Stock Price: $97
Market cap: $87.0 billion
Average daily volume: $595.0 million
Onepager
Here are the basics of KKR (click on the picture to expand)
[Table image — KKR onepager (data provided by Fiscal.ai). Description: "KKR is a global investment firm that helps businesses grow and creates value for its investors. They specialize in private equity, buying stakes in companies, improving their performance, and selling them for a profit. KKR also manages investment funds for institutional investors, earning fees based on the assets they oversee. Beyond private equity, KKR invests in credit, providing loans to businesses and earning interest, and real estate, where they make money from developing and managing property projects. They also operate in insurance, using premiums to fund further investments. KKR's goal is to make smart investment decisions, generate strong returns, and drive growth for their investors. They earn additional performance fees when their investments perform exceptionally well, aligning their success with the success of their clients. With a global presence, KKR is a leader in alternative asset management." Segments: Insurance 56.7%; Asset Management 38.2%. Geographical split: North America 40-60%; Europe 20-30%; Asia 15-25%. Management: founded 1976 by Henry Kravis, Jerome Kohlberg and George Roberts; Kravis and Roberts still own 18.5% of KKR; Joseph Bae and Scott Nuttall are the co-CEOs. Moat: "based on expertise and reputation. Their in-house operations team creates a lot of shareholder value while the firm's proven track record attracts high-quality deals." Main strengths: attractively growing end market; most of their earnings are recurring in nature. Main risks: the private equity market can be very volatile; the PE market is highly competitive. Main peers: Blackstone, Carlyle Group, Bain Capital, ... Ownership culture: CEO tenure 4.5 years; insider ownership 30.0%; owner-operator stock yes; CAGR since IPO 19.2%. Capital intensity: CAPEX/sales 0.8% (5-yr 1.0%); CAPEX/operating cash flow 33.6% (5-yr 4.0%). Capital allocation: ROIC 0.2% (5-yr avg 1.5%); ROE 8.8% (5-yr avg 10.9%). Profitability: gross margin 19.0% (5-yr avg 33.7%); profit margin 32.0% (5-yr avg 46.9%); SBCs as a % of net income 32.0%. Historical growth: revenue growth 5-yr 35.7%, 10-yr 34.0%; owner's earnings 10-yr 15.0%. Outlook: revenue growth (2 yr) 26.5%; EBITDA growth (2 yr) 18.0%; EPS growth (2 yr) 48.9%; EPS long-term growth estimate 21.1%. Valuation: forward PE 14.9x; average forward PE 5-yr 18.0x; average forward PE 10-yr 16.0x; FCF yield 0.4%.]
Three main takeaways
Here are the 3 important takeaways:
KKR is one of the largest asset managers in the world Thanks to its insurance activities, KKR enjoys "permanent capital" Excellent track record
One of the largest asset managers in the world
KKR is one of the world's largest alternative asset managers:
[Image — AUM ranking. Source: Investors Presentation]
Permanent Capital Advantage
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.
[Image — permanent capital. Source: Investors Presentation]
Excellent Track record
KKR has an excellent track record.
The stock is up +870% (!) since 2010.
[Image — share price since 2010. Source: Investors Presentation]
Quality Score
Every company gets a Quality Score based on 15 metrics.
Finally, the company gets a 'Total Quality Score' which is calculated by taking the sum of the score of all 15 metrics and dividing it by 15.
As you can see in the table below KKR gets a Total Quality Score of 8.3/10.
[Table image — KKR & Co Quality Score (Owner-Operator). Metric — comment — score: Business model — "KKR is a global investment firm; they help people and businesses grow their money by investing in big projects" — 8/10 Capability management — "Co-founders Kravis and Roberts are still active in the business; in total, insiders own 30.0% of the company" — 9/10 Sustainable competitive advantage — "KKR's moat is based on expertise and reputation; the company outperforms their benchmarks by a large margin" — 8/10 Attractiveness of the industry — "KKR still has a lot of growth potential; the private equity market is very competitive" — 8/10 Main risks — "KKR is subject to industry-wide risks typical of alternative asset managers; highly cyclical" — 7/10 Balance sheet — "KKR has a healthy balance sheet; most of their debts are in the long term" — 9.5/10 Capital intensity — "KKR requires significant capital for its insurance and strategic holdings segment; although their core asset management segment remains capital light" — 9/10 Capital allocation — "Capital allocation is the most important task of management; KKR outperform their benchmarks based on Investment Rate of Return" — 9.5/10 Profitability — "KKR is very profitable; 5-year fee-related earnings CAGR 23.7%; insurance spreads 1.8%" — 8.5/10 Usage of Stock-Based Compensation — "SBCs are a cost for shareholders and should be treated accordingly; average SBCs as a % of adjusted net income: 20.3%" — 4/10 Historical growth — "KKR grew very attractively in the past; revenue and ANI CAGR past 5 years: 35.7% and 20.0%" — 9/10 Outlook — "There are still plenty of growth opportunities for the company; expected long-term EPS growth: 21.1%" — 9/10 Valuation — "KKR is not an expensive business; the stock is currently trading at a 28.3% discount from its SOTP valuation approach" — 9.5/10 Evolution Owner's Earnings — "Stock prices follow the Owner's Earnings of a company; CAGR owner's earnings past 5 and 10 years: 19.4% and 15.0%" — 9/10 Historical value creation — "KKR managed to outperform the S&P 500 by a wide margin in the past; CAGR since IPO (2010): +19.2%" — 8/10 TOTAL SCORE — 8.3/10]
Full Investment Case
We wrote a 50-page deep dive about KKR.
You can download it here: Investment case KKR
Conclusion investment case
You don't want to read the entire investment case?
You can just read the conclusion instead.
KKR started as a private equity firm in the 1970s.
Today it manages $744 billion across three businesses:
Asset Management: Earns fee income from managing money
Insurance (through Global Atlantic): Takes in premiums and invests them
Strategic Holdings: Compounds value through their 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.
This means KKR always has capital to deploy, unlike most competitors who raise fixed ten-year funds and return the money. We call this Permanent capital.
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 markets KKR operates in are growing fast.
Alternative assets, private credit, and insurance are all expanding, and banks pulling back from direct lending after 2008 only accelerated that shift.
KKR was positioned to fill that gap and has been doing so ever since.
The business is still in growth mode.
Revenue, fee earnings, and net income have all compounded at strong double digit rates over the past five years.
On top of this, KKR raised nearly twice as much capital in 2025 as it did in 2023.
The balance sheet is stronger than it looks.
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.
But the most important risk?
Stock-based compensation
This is very high relative to their net income. But unfortunately this is an industry wide practice.
The leadership is experienced and has skin in the game. Founders Kravis and Roberts are still involved.
Co-CEOs Bae and Nuttall have been at the firm for 30 years each. Insiders own 30% of the company, which is far above the industry norm.
The growth targets are clear. Management wants to double earnings in five years.
The retail K-Series funds more than doubled in AUM in 2025 alone, opening up an entirely new pool of individual investor capital.
The Arctos acquisition adds sports investing and brings KKR closer to $1 trillion in AUM.
On valuation, the stock trades well below its own historical range and below every major peer.
A sum-of-the-parts analysis puts fair value at $133 per share which is significantly above its current market price.
But the real question is...
Are we buying it?
The answer is...
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. You can see the valuation of KKR here:
[Image — KKR valuation]
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Used sources Interactive Brokers: Portfolio data and executing all transactions Fiscal.ai: Financial data