Global investment firm KKR & Co. (NYSE: KKR) is positioned to benefit from two structural tailwinds: increasing retail investor flows into alternatives and continued industry consolidation, according to 1 Main Capital's third-quarter 2026 investor letter.
KKR traded at $98.01 on Nov. 2, 2026, with an $87.98 billion market capitalization. The stock has declined 24.48 percent year-to-date, trading within a 52-week range of $82.67 to $144.84.
1 Main Capital reiterated its positive view on KKR, noting the company's growth rate despite its scale and its ability to execute meaningful exits in a challenging realization environment. The firm re-bought shares on the dip.
A recent example is KKR's sale of USI to Aon for $17 billion in an all-cash transaction, expected to close in the fourth quarter of 2026. KKR's original 2017 investment in USI generated approximately a 6x multiple. The company anticipates receiving over $3 billion in after-tax proceeds from carry and balance sheet gains upon closing.
1 Main Capital expects KKR to increase capital returns following the USI transaction. The firm believes KKR is one of a few players positioned to leverage specific market dynamics. Retail flows represent a significant growth opportunity, with mega alternative asset managers expected to capture a disproportionate share. Additionally, smaller managers are ceding market share due to poor performance of recent investment vintages, favoring larger, established firms like KKR.
1 Main Capital values KKR at 12 times its estimate of 2027 earnings, citing significant growth runway over the coming decade.
1 Main Capital's overall fund performance for Q3 2026 returned -9.1 percent, compared to +2.3 percent for the S&P 500 and -7.2 percent for the Russell 2000. The shortfall reflected weak share prices across holdings and limited exposure to sectors driving market gains, such as energy and technology. Consumer discretionary, a focus area, dragged on performance.
Despite the challenging quarter, 1 Main Capital maintains confidence in its portfolio, citing low valuations, strong cash generation, and long-term growth potential. The firm's largest positions include Basic-Fit, Hilton Grand Vacations, IWG, KKR and Limbach. The firm also added WildBrain as a new holding.
1 Main Capital flagged risks from high oil prices, rising interest rates and uncertainty surrounding AI investment, emphasizing disciplined capital allocation in response.
