Picture an endless river of money gushing downhill.
This never-ending stream of money hits the edge of a hill…
It shoots off the edge of the rocks… and sprays into the air…
This cash – income from private investments – showers down on a special group of investors below.
They cheer and sing as they pack the cash, suitcases, and travel bags into their pockets.
But there’s more to this picture.
Standing 100 feet away, behind a velvet rope, millions gather and watch.
These people are forbidden from this stream of cash.
That’s because the U.S. government has made it illegal for them to play in this river of money.
Private equity companies set high investment minimums that prevent them from getting their feet wet.
As I explained yesterday, it’s a pretty exclusive club, and most Americans are not included.
Private Equity Envy
For most people, the mention of “private equity” elicits envy around the globe.
Over the last 30 years, private equity companies have regularly delivered superior returns to the market, tapping into the major economic and business trends and benefiting from the ongoing consolidation wave in public and private companies around the globe.
High fives are exchanged among institutional investors and private family offices that can bypass the velvet rope and participate in these investment vehicles.
The rich get richer… and the mom-and-pop retail investor is left standing with their mouths watering as the river of money showers down on the ultra-elite.
But what if I told you there’s a way around that velvet rope…
You can tap into the income streams of one of the world’s top private equity firms.
You’d join a special club of investors whose investor envelopes arrive from the prestigious private equity giant KKR & Company (KKR).
Private Equity Goliath: KKR
This private equity heavy hitter has stood atop the industry mountain for decades.
Founded in 1976 and headquartered in New York, founders and cousins Henry Kravis and George Roberts (the second and third names in Kohlberg Kravis Roberts) have been at the helm of one of the most incredible money-making organizations in the history of America.
Their legacy has been unrivaled.
Just think about this… Apple Inc. was founded the same year as KKR’s inception: 1976.
Since then, Apple, the world’s most valuable public company, has had seven CEOS.
Microsoft, which was founded in 1975, has had three CEOs.
But KKR founders have remained the leaders of this company, outlasting Bill Gates, Steve Jobs, and thousands of other Fortune 500 executives for 42 years. (Note: Kohlberg left KKR in 1987.)
These cousins must be doing something right…
What started as a $120,000 partnership in the 1970s has boomed into a firm with a whopping $504 billion in assets under management.
The company has generated an incredible stream of private-equity returns ranging between 19% to 20% a year, annualized, over KKR’s 47-year history.
That tops the annual gains for the Standard & Poor’s 500 over the same stretch.
KKR was one of the first firms to practice large-scale leveraged buyouts (LBO), a strategy that remains at the heart of the organization.
Over four decades, KKR has created an empire of private companies. Its portfolio has consisted of more than 280 PE investments with more than $500 billion in total enterprise value.
You don’t reach that level of market influence without unrivaled performance and unshakable investor confidence.
A Record of Success
KKR was famously responsible for the 1989 leveraged buyout of RJR Nabisco.
At the time, this was the largest purchase in the market’s history.
Many deals would surpass that in later years, but KKR would set a record…
In 2007, KKR was behind the massive buyout of Texas Instruments, which remains the largest buyout deal in market history.
The company is also famous for purchasing Dollar General, Duracell International, First Data, Oriental Brewery, and grocery giant Safeway.
It has made a fortune by selling all or part of these portfolio companies to other private-equity firms, investors or through initial public offerings.
But KKR is not just a private equity firm that buys and sells companies to earn double-digit returns.
You see, many other private equity firms imitated KKR’s LBO strategy…
This forced KKR leadership to think outside the box and start funds that specialize in different ways to make their investors a lot of money quickly.
Today, KKR manages investment funds that put money in hedge funds, real estate, bonds, and other asset classes.
The firm has an array of alternative income strategies that help funds and institutional investors obtain high-income returns.
Its 2016 purchase of its financial subsidiary KKR Financial bolstered its balance sheet and provided it with an even larger capital base to increase its growth and bolster its distributable returns.
That has enabled the company to proactively finance other private equity deals in-house and among its Wall Street competitors.
They make a lot of rich people wealthier…
And they do so by never letting a good crisis go to waste.
In March 2020, the PE giant’s stock cratered to $15 on concerns about global liquidity and the COVID crisis. Today, the stock sits just under $50, anchored by strong management and the ability to navigate up-and-down markets.
KKR is a buy – even in this crisis. If shares fall to $45, you may want to consider buying your first stake. Then look for any opportunity to snap up shares at an even lower level.
But there’s another way you can tap into KKR…
You can own its KKR Income Opportunities Fund (KIO), a unique PE-like fund that pays nearly 14%.
I’ll talk more about this fund in the coming days. But now might be a good time to pick up a few shares.
You’ll thank yourself in five years.
To your wealth,
Garrett Baldwin
Market Momentum is Red
Market momentum remains red as buyers remain on the sideline. Governments are trying to stabilize the financial system, and many people are still too panicked to think about equities right now. I believe you should focus on value and join my Tactical Wealth Investor research service. You can sign up right here at a discounted Charter Member price. This special pricing is going away soon, so if you’re considering joining, now’s the time!
