Insider buying can provide investors with valuable clues about a stock’s potential. Insiders sell company stock for many reasons. Yet they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight a substantial insider purchase at KKR & Co Inc (KKR:US). KKR is a global investment firm that offers alternative asset management and insurance solutions. It is listed on the New York Stock Exchange and currently has a market capitalization of $41 billion.
KKR & Co: Insider Buying
Our records show that on 12 February, board member Robert Scully bought 26,000 KKR shares at a price of $48.13 per share. This purchase – which cost the insider approximately $1.3 million – increased his holding by 19%.
This insider transaction looks interesting for two reasons. Firstly, it is a substantial purchase, both in nominal and relative terms. Our data shows that it is the second largest insider purchase at KKR in the last two years.
Secondly, Mr Scully has significant company and industry experience. Previously, he was co-president, chairman of global capital markets, and vice chairman of investment banking at Morgan Stanley. Prior to joining Morgan Stanley in 1996, he served as a managing director at Lehman Brothers and at Salomon Brothers. He has been a member of the KKR board of directors since July 2010. This experience adds weight to the purchase.
Positioned Well For Growth
KKR posted a solid set of fourth-quarter and full-year results recently.
After-tax distributable earnings were $431.1 million for the quarter, compared with $375.1 million in the comparable prior period. Meanwhile, after-tax distributable earnings were $1,522.4 million for the year ended 31 December, compared with $1,405.3 million in the comparable prior period. Assets under management and fee-paying assets under management were $252 billion and $186 billion respectively, up 15% and 16% year on year.
As a result of this performance, KKR said that it intends to increase its regular annualized dividend per share of common stock from $0.54 to $0.58.
“We ended 2020 with a strong fourth quarter. In addition to strong investment performance and continued book value growth, we had the most active fundraising and deployment year in our history,” said Henry R. Kravis and George R. Roberts, Co- Chairmen and Co-Chief Executive Officers of KKR.
“The strength of our fundamentals, coupled with the completion of our acquisition of Global Atlantic, positions us well for future growth,” they added.
Given this strong update, and the confident tone from management, we see the insider buying here as a bullish signal.