ValueAct Capital Adds To KKR Position Again

Jeff Ubben's activist firm ValueAct Capital has filed an amended 13D with the SEC regarding its stake in KKR (KKR).  Per the filing, ValueAct now owns 8.9% of the company with over 41.9 million shares.

This is the second time this month they've disclosed purchases in KKR.  Their latest round of buying came on September 6th through 8th, as well as September 11th through 15th, and on September 18th too.

In total, they acquired 6.75 million shares at prices ranging from $18.19 to $19.02. 

The filing also notes they also have exposure via cash-settled swaps with respect to 3.65 million shares.

Per Google Finance, KKR is "a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company's business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm's assets and deploys capital."

ValueAct Capital Increases KKR Stake

Jeff Ubben's firm ValueAct Capital has increased its stake in KKR (KKR) per an amended 13D just filed with the SEC.  ValueAct now owns 7.5% of the company with over 35.15 million shares.

The filing notes they were out buying on August 22nd through 25th, as well as the 28th through September 1st, and on September 5th as well.  In total, they acquired 6.6 million shares.  They were buying between $18.42 and $18.98.

Ubben's firm also holds cash settled swaps with respect to 10.4 million common shares that aren't included in 35 million shares they own.

ValueAct has made quite a few portfolio adjustments recently and we've highlighted more of them here.

Per Google Finance, KKR is "a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company's business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm's assets and deploys capital."

ValueAct Capital Takes KKR Stake

Jeff Ubben's activist firm ValueAct Capital has taken around a $750 million stake in private equity firm KKR (KKR).  Partner Mason Morfit talked about the position at 13D Monitor's Active-Passive Investor Summit in New York, according to Business Insider.

This is yet another prominent firm that has jumped on the private equity train.  We've highlighted recently how Tiger Global has been building a position in Apollo Global Management.

At the presentation, Morfit called KKR a "50 cent dollar" and thinks that big firms will get even larger.

ValueAct recently returned a chunk of capital to investors as they were having trouble finding ideas in a market with stretched valuations.  But apparently they've at least found one place to park some capital in KKR.

You can view other recent portfolio activity from ValueAct here.

Per Google Finance, KKR is "a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company's business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm's assets and deploys capital."

Jonathan Gray on Real Estate: Invest For Kids Chicago 2016

We're posting up notes from the Invest For Kids 2016 investment conference.  Next up is Jonathan Gray, head of real estate at Blackstone who talked about real estate.


Jonathan Gray's Presentation at Invest For Kids Chicago 2016

•    16% net return to Blackstone

•    Our edge is scale and conviction

•    We seek an opportunity to buy it, fix it, sell it

•    Timing on Hilton and EOP deals in 2007 was poor, but still made 3x our investors’ money because we had the right structure and we didn’t panic; both were good assets and while levered they had reserves and no covenants; key was not being forced to sell; and had 2/3 of EOP assets not been sold 90 days after closing to delever, we wouldn’t be sitting here

•    Airbnb has reduced hotels’ pricing power, but most are leisure travels; business travels often still want hotels

•    Record occupancy across hotel industry

•    Good opportunity in logistics but a real challenge for retail, especially “generic consumer supply” retail

•    We’re looking to own in areas that are exciting and driven by technology/innovation: Bay Area, Seattle, New York

•    Risks today: sharp jump in rates due to wage inflation; political crisis leading to economic crisis in Europe; China deceleration gets worse

o    All are risks but none are base case

•    Sam Zell says I’m too optimistic but I think we’re likely to continue slow growth; housing recovery has legs; banks are in good shape; realistic but trying to find opportunity in slow growth world

•    Powerful urbanization trend in Chicago – people want to come here and live in the city, with companies like McDonald’s and Conagra following them


Be sure to check out the rest of the presentations from Invest For Kids 2016.

Investing Lessons From KKR's Henry Kravis

Bloomberg has an excellent interview out with Henry Kravis, founder of the well-known private equity firm Kohlberg Kravis Roberts, better known as KKR.

Here are some interesting quotes on investing and hedge funds:


On the difference between hedge funds and private equity:

"So I imagine there will be many more private equity firms than there are today. It’s very hard to kill a private equity firm. You can kill a hedge fund overnight; people pull their money out as fast as they put it in. You can’t pull your money out of a private equity firm as easily. If a firm is bad, all that can really happen is that it won’t be able to raise another fund. Eventually it’ll go out of business. But that can take years."


On who make good investors:

"Because to me, people who are curious are going to be better investors and better stewards of others' money.  If there's no curiosity, you're basically doing something that's already been done by someone else."


On focusing on the downside & learning from mistakes:

"When I was in my early 30s at Bear Stearns, I’d have drinks after work with a friend of my father’s who was an entrepreneur and owned a bunch of companies. “Never worry about what you might earn on the upside,” he’d say. “Always worry about what you might lose on the downside.” And it was a great lesson for me, because I was young. All I worried about was trying to get a deal done, for my investors and hopefully for myself. But you know, when you’re young, oftentimes you don’t worry about something going wrong. I guess as you get older you worry about that, because you’ve had a lot of things go wrong."


On what he looks for in an investment:

"We focus a lot on disrupters.  What they're doing, what they could do..  When we're making an investment in a nonstartup-type company, we ask ourselves, "Who's going to disrupt this company or industry?"


On the birth of the industry-standard 20% fee:

"George’s father and my father were in the oil-and-gas business, and in those days there was something called “a third for a quarter.” If I had a lease and wanted to drill a well, I would go to the money person and say, “I’ll put up 25 percent of the cost, you put up 75 percent, and you’re going to get a two-thirds interest and I’m going to get a one-third interest for my 25 percent.” We thought 20 is close enough to 25. I’m often asked, “Why didn’t you pick 25 percent because that would have stuck and carried interest?” We were just trying to get started, so that was literally what we started from." 


On data that's interested him recently:

"Our most recent (FirstData ~ FDC) SpendTrend reports have shown that consumers’ largest expenditure, by far, has been on health care. It’s funny, you had a big dividend for the consumer with the advent of lower gasoline prices. You would think they’d go out and spend on things, go shopping at Macy’s or whatever. But they have not spent on things, except on essentials. A lot of people are saying, I want to spend my money on experiences. And we can pick that up."


Be sure to read the full interview here.

Tiger Global Invests in SEEK Asia, Continues to Play Emerging Markets

Chase Coleman's hedge fund firm Tiger Global has made another private investment, this time in SEEK Asia (a subsidiary of SEEK Limited). The hedge fund reserves a portion of its portfolio for stakes in non-publicly traded companies and we've detailed how they've been focusing on web companies in emerging markets.

Tiger's investment in SEEK Asia is a co-investment alongside the likes of Consolidated Media Holdings (CMJ) and Macquarie Capital. It appears as though the three have invested around $63 million in total. Upon news of this investment, SEEK Asia also recently announced that it has purchased 60% of JobsDB, an online employment company that focuses on Southeast Asia. The purchase price of this stake is $204 million.

To see what else Tiger Global has invested in, head to our analysis in our newsletter.

Chase Coleman's Tiger Global Purchases Stake in Russian Travel Portal Anywayanyday.com

While we typically cover investments hedge funds make in public companies, we like to keep an eye on investments made in private companies as well. The reason? A potential lead to secular themes that investment firms are targeting. Case in point: hedge fund Tiger Global and its portfolio of web properties.

According to Russian newspaper Vedomosti, Chase Coleman's hedge fund has paid $10 million for a 40% stake in Anywayanyday.com, an online ticket booking site in Russia. The site is owned by an affiliate of Valars, a grain trading company also based in Russia. The website currently garners around 3% of the Russian online airline ticket sales market and sees yearly revenue of around $5 million. The company is also planning to 'revitalize' its presence in the hotel booking segment as well.

Those of you familiar with Chase Coleman's hedge fund firm will already know that they have a small portion of the portfolio allocated to private investments. And more often than not, that allocation is targeted at the technology sector. Tiger Global of course was founded by Chase Coleman after being seeded by legendary hedge fund manager Julian Robertson.

Glancing at some of Tiger Global's other private stakes, you start to see a theme of emerging market online portals. Tiger also owns a stake in Yandex, a Russian search/portal company, a position in Yonja (a Turkish social media site), Indian focused online travel site makemytrip.com (which recently filed to go public), as well as a stake in Maktoob (an Arabic portal site that was acquired by Yahoo). Examining Tiger's public equity stakes, you see the online portal theme continues. As of the first quarter, they also owned sizable stakes in Google (GOOG), Mercadolibre (MELI), and Priceline.com (PCLN). They definitely have a decent amount of exposure to the portal/travel meme in both public and private stakes.

Those of you interested in the rest of Coleman's investments can check out Tiger Global's portfolio.