The equity of sturdy investment company KKR (NYSE: KKR) made for a fine investment all its own on Tuesday. Its stock price leaped by nearly 5% that trading session, thanks to news of a big institutional investor’s reversal on a planned sale (which likely would have pushed the stock’s price down). KKR’s share gain easily beat the slightly over 1% advance of the S&P 500 index.
Planned sale stopped?
That sizable investor is China Investment Corporation (CIC), the country’s sovereign wealth fund. Before market open, Bloomberg, citing unidentified “people familiar with the deal,” reported that CIC has canceled a planned sale of several stakes it held in U.S. investment management companies.
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This list included top names in the sector — in addition to KKR, positions in Carlyle Group and TPG were to be sold. The sell-off was planned earlier this year as a move to reduce exposure to U.S. businesses. However, at present CIC is no longer interested in such a divestment. The financial news agency didn’t cite any reason or reasons for this.
U.S. investment bank Evercore was recruited by CIC to broker the sale, Bloomberg and another, earlier article from Reuters stated. Neither China Investment nor Evercore responded to Bloomberg’s requests for comment on the matter.
Similarly, KKR, Carlyle Group, and TPG haven’t yet made official statements regarding it, either.
Cold feet getting warmer
A foreign investor getting cold feet about selling U.S. equities is entirely plausible; earlier this year the world grew increasingly worried that the “punitive” tariffs initially imposed by the Trump administration would damage the U.S. economy. Those concerns are fading quickly, so potential sellers like CIC might be feeling more confident about our country’s growth prospects.
I wouldn’t buy or sell any stock purely on the basis of an institutional investor’s move, so I firmly believe folks should hold or ditch KKR entirely on its fundamentals. Given that, it’s a wily, veteran company that plies its trade very effectively — and to me, therefore, is always a consideration for a buy.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends KKR. The Motley Fool has a disclosure policy.
