KKR Saw Declining Valuations in 3Q15


Dec. 4 2020, Updated 10:53 a.m. ET

Returns to shareholders

KKR & Co. L.P. (KKR) reported an economic net loss of $286 million for the third quarter of 2015. The company’s earnings decreased on a decline in the value of its holdings due to a market rout in 3Q15. KKR’s distributable earnings declined to $349 million, or $0.35 per unit, in 3Q15.

The company saw a reversal of carried interest, negative performance fees, and investment income, resulting in an economic loss. KKR announced a unit repurchase program and a change in distribution policy beginning in 4Q15.

KKR declared a distribution of $0.35 per unit in 3Q15, which translates to an annualized dividend yield of 7.9%. The company’s dividend yield fell due to lower distributions compared to previous quarters, but it is still competitive when compared to its peers.

  • The Carlyle Group (CG): 8.08%
  • Blackstone Group (BX): 7.2%
  • Apollo Global Management (APO): 12.76%
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Declining valuations

KKR is valued at 7.1x on a one-year forward earnings basis compared to its peers, trading at 8.9x. The discount has widened marginally over the last quarter due to the overall decline in value of its holdings, especially in the energy sector.

One of the company’s major holdings, Samson Resources Corp., filed for bankruptcy on September 16, 2015. Samson Resources has widened its losses due to falling oil prices (USO). KKR’s two major holdings, Samson Resources and Energy Future Holdings, could result in losses of $5 billion. KKR also expects to hold a longer stake in oil companies until commodity prices turn favorable.

KKR stock has declined by 22% over the past 12 months on higher risk, decreasing the valuations of its holdings. In after-market trading, KKR stock declined more than 7% as the its company posted results after market hours.


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