Akre Capital Management highlighted KKR & Co. Inc. (NYSE: KKR) as a core holding in its third-quarter 2026 investor letter, arguing that the firm's multiple growth engines support long-term compounding despite a significant market downturn. The investment manager contended that KKR remains financially robust, projecting mid-teens free-cash-flow growth and return on invested capital exceeding 43%, while maintaining lower leverage than the S&P 500. This assessment stands in contrast to the stock's recent performance, as KKR closed at $91.34 on October 23, 2026, reflecting a year-to-date decline of 28.50% and a market capitalization of $81.99 billion.
The Akre Focus ETF, which holds KKR alongside other major positions such as Mastercard, Visa, and Constellation Software, underperformed the broader market in the third quarter of 2026. The fund fell 0.84% during the period, a result driven by a 14.38% drop in September that erased gains from July and August. This performance lagged the S&P 500, which rose 2.30% in the same quarter. Over the trailing 12-month period, the fund returned -21.80%, compared with a +15.74% gain for the index.
In its letter, Akre Capital cited remarks from KKR Co-CEO Scott Nuttall to illustrate the disconnect between market sentiment and internal operations. Nuttall noted that while the firm has been public for 17 years and he and Co-CEO Joe Bae have been with the company for 30 years, current external pessimism appears unusually detached from operating fundamentals. The Akre team expressed empathy with this viewpoint, stating that general concerns about the private equity sector find little application to KKR specifically. The fund maintains that alternative asset managers like KKR have historically compounded at attractive rates regardless of macro fears dominating financial headlines.
Despite Akre's defense of the stock's long-term value, institutional interest in KKR has waned slightly. Data indicates that 77 hedge fund portfolios held KKR shares at the end of the second quarter of 2026, down from 82 in the previous quarter. The stock is not currently ranked among the most popular holdings among hedge funds according to Insider Monkey's database.
Insider Monkey notes that while KKR presents investment potential, certain artificial intelligence stocks may offer greater upside with less downside risk. The letter also acknowledged challenges at other portfolio holdings, including LVMH, Copart, FICO, and CoStar, while expressing continued confidence in the strategic positioning of its top five holdings for 2026.