Kohlberg Kravis and Roberts (NYSE: KKR) reported their public equity holdings to the SEC this week. While most of their largest positions are companies that own a controlling interest after a buyout and partial IPO, their buying and selling activities in a given quarter can provide valuable insight into their current thoughts.

Kohlberg Kravis and Roberts Q1 SEC Filings

KKR’s most significant purchases in the first quarter of 2019 was an oil and gas royalty company. Viper Energy Partners (NASDAQ: VNOM) saw its price decline dramatically as oil prices collapsed in the quarter.

Venom was formed back in 2014 by Diamondback Energy (NASDAQ:FANG) to own, acquire and exploit oil and natural gas properties in North America. While it is likely that they see a decline in royalty income early in the year, they will be a significant beneficiary of higher oil prices in the future. It is highly unlikely that they see future decline sin distributions as Viper hedged almost 100% of expected 2020 oil production and over 50% of expected 2021 production. KKR bought 3.3 million shares of Viper and now owns 2.2% of Viper.

More on KKR in 2020

KKR also made a bet on the recovery of amusement parks during the first quarter. They bought a little over 3% of Six Flags (NYSE: SIX) during the market meltdown. Six Flags owns and operates 26 amusement and water parks in the United States, Mexico, and Canada. Its stock price fell by more than 50% due to park closures and greater market uncertainty.

Six Flags insiders were also big believers that the amusement park industry will rebound when the crisis is passed. Director Arik Ruchim, a partner at activist investing firm H Partners, has purchased more than 2 million shares since the crisis began.

KKR also increased its stake in annuity provider American Equity Life (AEL) by 83% in the first quarter as prices declined. American Equity life has seen a 40% decline in its stock price this year. The selloff allowed KKR to increased its stake at ridiculously low multiples of assets value and earnings power.

KKR as an Activist 

KKR also took an activist position in restaurant and entertainment company Dave and Buster (PLAY) in the first quarter. The private equity firm currently owns 8% and named managing director John Hockin to Dave and Busters board.
KKR also jumped into the battered REIT market by buying 471,000 shares of Kilroy Realty Company (KRG). Kilroy is a leading West Coast landlord and developer, with a major presence in San Diego, Greater Los Angeles, the San Francisco Bay Area, and the Pacific Northwest. They were not the only private equity firm buying Kilroy as Blackstone (NYSE: BX) was the biggest buyer as they snapped up almost 2.9 million shares of the REIT as prices fell in the first quarter.
KKR as a net seller in the quarter as they established or added to just 13 positions while selling out of or reducing positions in 22 companies.

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