KKR: Overreaction To Modest Dilution Creates Opportunity (Rating Upgrade)
Portfolio Pulse from
KKR's stock has dropped over 25% in 2025 due to concerns over dilution from issuing $1.5 billion in mandatory convertible preferred shares. However, the stock is still up 21% from last year, driven by strong financial results. The funds will be used for Strategic Holdings, which has aggressive growth targets, adding potential volatility to KKR's earnings.
March 06, 2025 | 8:00 am
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NEGATIVE IMPACT
KKR's issuance of $1.5 billion in mandatory convertible preferred shares has led to a 25% drop in stock price in 2025, despite a 21% increase from last year. The funds will support Strategic Holdings' growth, introducing potential volatility to earnings.
The issuance of convertible preferred shares dilutes existing shareholders by about 1%, which has led to a significant drop in KKR's stock price. Despite strong financial results, the market is reacting to the potential volatility introduced by Strategic Holdings' aggressive growth targets.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100