Barron’s has some interesting “sum-of-the-parts” analysis on the publicly traded limited partnership units of KKR & Co. L.P. (NYSE:KKR). Says Barron’s:
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KKR ran $55 billion in assets across a variety of strategies as of March 31. Simply valuing the management fee stream from these assets at a 15 price-to-earnings multiple, in line with other money managers, and placing a lower multiple on its capital-markets unit, yields $3.25 or so per share in value, fully taxed. Adding the straight book value of its private and public direct investments produces another $6.25 per share, for a total implied value of $9.50, right at the present share price.Read the article.
The next trick is valuing potential future performance fees on the $27 billion of deals housed in its private-equity funds, as well as those of deals not yet done and funds not yet raised.
One hedge-fund manager who has been buying the stock pencils in as plausible an 8% annual gain in the private funds, calculates the present value of the resulting performance fees (or the 60% of performance fees that flow to shareholders after employees get their taste) and gives this line item a 10 multiple to arrive at $3.70 a share in value. That produces a total sum-of-the-parts target above $13, more than 35% above the current price.
Analysts at Keefe Bruyette & Woods go even further, figuring KKR’s operating business to be worth $9 to $11 per share and the private-equity portfolio worth another $6.22 atop that, for a total value between $15.22 and $17.22.
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