Here's Why KKR & Co. (KKR) Shares Fell in Q2

Alphyn Capital Management, an investment management firm, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 12.4% net in the second quarter compared to 10.9% for the S&P 500 Index. As of the second quarter of 2025, the top ten holdings accounted for approximately 65% of the portfolio, and approximately 17% of the portfolio was held in cash. Market conditions remained volatile in Q2 due to ongoing tariff developments and evolving interest rate projections. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Alphyn Capital Management highlighted stocks such as KKR & Co. Inc. (NYSE:KKR). KKR & Co. Inc. (NYSE:KKR) is an equity and real estate investment firm. The one-month return of KKR & Co. Inc. (NYSE:KKR) was 17.90%, and its shares gained 29.18% of their value over the last 52 weeks. On July 10, 2025, KKR & Co. Inc. (NYSE:KKR) stock closed at $143.05 per share, with a market capitalization of $132.351 billion.

Alphyn Capital Management stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its second quarter 2025 investor letter:

"KKR & Co. Inc.'s (NYSE:KKR) share price fell earlier this year after tariff headlines and worries about a tougher market for private equity realizations, the exits that turn paper gains into cash and carried interest, before rebounding partly in Q2. While those concerns are real, the firm’s strength is its resilient cash-flow engine. Most earnings come from what the company recently started to call “Total Operating Earnings,” which are generally steadier than investment income and generate $4.5bn a year.

Three elements drive this figure. First, steady management fees which are charged on committed or invested capital, not quarterly marks. Fee paying AUM grew 12 % year over year to $526bn, lifting fee related earnings 23 % to $823m at a 69 % margin. Second, insurance operating earnings: Global Atlantic manages nearly $200bn and earned $259m pre tax in the quarter, nearly a 20 % return on equity. Every new annuity brings both an investment-management fee and a balance-sheet spread, creating a stable, self-funded growth flywheel. Third, strategic holdings, core companies KKR plans to own long term, now contribute $90m, with a line of sight to $300m and eventually $1bn. As regards investment income, $116bn of uncalled commitments, $245bn of carry-eligible assets already marked above cost, and an $800m monetization pipeline give visibility on future fees and carry, supporting KKR’s ability to compound regardless of where the fundraising cycle sits in the near term."

KKR & Co. Inc. (NYSE:KKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 88 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the first quarter, which was 83 in the previous quarter. While we acknowledge the potential of KKR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered KKR & Co. Inc. (NYSE:KKR) and shared SVN Capital Fund's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.