KKR: A Contrarian Play in Alternative Assets Amid Market Volatility

As markets grapple with geopolitical tensions, rising interest rates, and AI-driven disruption, KKR & Co. Inc. (NYSE: KKR) stands out as a contrarian opportunity. Despite near-term headwinds, the firm's strategic focus on secular growth drivers—alternative assets, private credit, and energy infrastructure—positions it to thrive in a shifting economic landscape. Supported by endorsements from Jim Cramer and institutional investors like Baron Fifth Avenue, KKR's undervaluation relative to its long-term potential makes it a compelling buy for patient investors.

Cramer's Endorsement: A Bullish Signal

Jim Cramer, the outspoken host of Mad Money, has repeatedly highlighted KKR as a standout name in the private equity sector. In March 2024, he emphasized KKR's ability to navigate market volatility and execute on its long-term strategies. Since then, KKR's stock has risen 13%, outperforming 80% of Cramer's recommended stocks from the same period.

Cramer's confidence stems from KKR's diversified portfolio, which spans private equity, real estate, credit, and infrastructure. While acknowledging the challenges of slower capital markets activity, he argues that KKR's track record of delivering returns through cycles justifies its current valuation.

Baron Fifth Avenue's Bullish Stance: Betting on Private Credit and Infrastructure

In Q1 2025, Baron Fifth Avenue Growth Fund added to its KKR stake, citing its exposure to private credit via Global Atlantic and infrastructure investments as key growth catalysts. Global Atlantic, KKR's insurance subsidiary, provides a unique advantage: its long-duration capital aligns perfectly with infrastructure projects, which require steady, long-term funding.

The fund's rationale hinges on two pillars:
1. Private Credit Resilience: Global Atlantic's portfolio benefits from the “duration mismatch” between assets and liabilities, enabling KKR to deploy capital in low-risk, high-return opportunities.
2. Infrastructure's Secular Tailwinds: As governments and corporations invest in renewable energy, fiber optics, and smart grids, KKR's infrastructure holdings—like its $2.5 billion acquisition of Zenith Energy—position it to capture growth in Asia-Pacific's energy transition.

AI-Driven Energy Infrastructure: The Hidden Catalyst

KKR's growth isn't limited to traditional sectors. The firm is capitalizing on the interdependence of AI and energy infrastructure, a theme highlighted in its 2025 Global Macro Outlook. AI's insatiable demand for data centers and cloud computing requires massive investments in energy systems, creating a $720 billion opportunity for grid upgrades by 2030.

KKR's infrastructure investments in renewables and transmission networks act as the “picks and shovels” of the AI revolution. For instance, its fiber optic investments provide the backbone for 5G and data centers, while its renewable energy assets reduce carbon footprints—a critical ESG factor for institutional investors.

Valuation: A Discounted Price for Long-Term Growth

Despite its strategic strengths, KKR's stock trades at a price-to-book (P/B) ratio of 1.57, below its five-year average of 1.8. This undervaluation is puzzling given its 6.97% FCF yield and positive free cash flow ($153.85 billion LTM). Analysts project a modest EPS growth to $2.45 by year-end, supported by stable dividends (yield: 0.58%) and disciplined capital allocation.

The firm's Piotroski F-Score of 5 reflects moderate financial health, with manageable debt levels (debt-to-FCF ratio: 6.84). While short-term risks like slower realization rates persist, they pale against the secular demand for alternative assets and infrastructure.

Investment Thesis: A Contrarian's Dream

KKR is a buy for investors seeking resilience in volatility. Key catalysts include:
- Global Atlantic's private credit opportunities, which shield the firm from public market swings.
- Zenith Energy's renewable assets, unlocking Asia-Pacific's energy transition.
- AI/energy infrastructure synergy, as data demands fuel grid investments.

While near-term headwinds—like slower capital markets—may pressure the stock, KKR's diversified portfolio and long-term contracts (e.g., infrastructure) provide a buffer. With a 52-week price change of +17.91%, the stock has already shown its ability to rebound.

Final Verdict

KKR's valuation discount and secular tailwinds present a compelling contrarian opportunity. Investors should consider adding KKR to a portfolio as a long-term growth play, particularly if they believe in the rise of alternative assets, infrastructure, and the energy transition. As Cramer noted, “This is a company that does well when others do poorly”—a mantra for navigating today's uncertain markets.

Risk Factors: Geopolitical risks, interest rate sensitivity, and slower private equity fundraising.

KKR's stock price as of June 30, 2025: $133.03