Greenhaven Road Capital Discusses KKR Amid Weak Third-Quarter Performance

Greenhaven Road Capital’s third-quarter 2025 investor letter shows the hedge fund continuing a difficult year and taking a closer look at one of its long-held positions, KKR & Co. Inc. The Stamford-based fund reported a roughly 9% decline for both the quarter and the year to date, attributing most of the setback to limited exposure to artificial-intelligence beneficiaries, near-zero overlap with major equity benchmarks, and scant ownership of unprofitable high-growth businesses that led recent market rallies.

KKR, an alternative asset manager focused on private equity and real estate, ranks among the fund’s largest holdings. Despite modest gains over the past month, the stock has been under pressure throughout 2025. Shares closed at $121.32 on 7 November 2025, reflecting a 22.18% decline over the previous 52 weeks. At that closing price, the company held a market capitalization of approximately $112.286 billion.

The investor letter, dated for the third quarter, notes that KKR’s weakness mirrors a broader cooldown across the alternative-asset-management sector. Peer firms including Blackstone, Apollo Global Management, Carlyle Group and Blue Owl Capital have also experienced share-price compression. The retreat is primarily linked to caution around two of the industry’s core businesses—traditional private equity and private credit.

Private-equity strategies have come under scrutiny as higher interest rates raise financing costs and dampen exit valuations. Elevated borrowing costs can drag on the leveraged buyout model that has historically relied on inexpensive debt to enhance returns. Simultaneously, the private-credit market, which has attracted record fundraising over the past several years, faces questions about default risks and the sustainability of outsize yields if economic growth slows.

Greenhaven Road Capital acknowledges that these sector headwinds have weighed on KKR’s stock price during 2025. Still, the fund continues to hold the position, underscoring management’s long-term outlook for the franchise. KKR operates an integrated platform spanning private equity, infrastructure, real estate, credit and insurance, and earns recurring management and performance fees across those verticals. The firm’s fee-related earnings provide a steadier stream of cash flow than the more cyclical carry income tied to asset sales.

Although alternative asset managers have lagged the broader market this year, institutional demand for private-market exposure remains intact, according to data from Preqin. Pension funds, insurance companies and sovereign-wealth vehicles continue to allocate capital to strategies that target higher absolute returns and longer-duration assets than those typically available in public markets. KKR has aimed to capture that demand by expanding its products, increasing fundraising capabilities, and broadening its global investor base.

The hedge fund’s letter also highlights structural differences between its portfolio and the main equity indices. While the S&P 500 and Russell 2000 enjoyed a rebound in the third quarter, much of the performance came from large-capitalization technology leaders and early-stage software firms tied to artificial-intelligence optimism. Greenhaven Road Capital holds minimal positions in that segment, leading to relative underperformance. The manager regards the absence of overlap with benchmark components as deliberate, reflecting a conviction in less trafficked areas of the market.

Within alternative assets, Greenhaven Road Capital notes that investor sentiment has become increasingly selective. Equity-based strategies have faced greater skepticism than credit-focused mandates, as slowing economic activity moderates exit opportunities for portfolio companies. However, private credit faces its own concerns, including elevated leverage levels and the possibility of tighter liquidity conditions if short-term rates remain higher for longer.

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KKR’s diversified approach, combining equity, credit and real-assets platforms, may help mitigate some of those pressures, the letter argues. The firm also earns insurance income through its acquisition of Global Atlantic, adding another steady revenue stream. Nevertheless, the stock remains susceptible to broad market swings and changes in risk appetite toward illiquid investment strategies.

At quarter-end, KKR’s one-month return of 0.73% modestly eclipsed the broader alternative-asset-management cohort, but the year-over-year decline persisted. Greenhaven Road Capital attributes the discrepancy to investor focus on near-term fee growth and the uncertain timing of realization events that crystallize performance income.

Looking ahead, the fund plans to maintain its stake while monitoring fundraising trends, deployment pace and realizations across KKR’s flagship vehicles. Management’s ability to navigate elevated financing costs, protect portfolio company margins and generate exits will likely determine whether the stock recovers lost ground.

For Greenhaven Road Capital, the third-quarter setback marks the continuation of a volatile year. The manager reiterates that the portfolio is intentionally concentrated and differs significantly from index constituents, positioning the fund for performance divergence—both positive and negative—over shorter horizons. The letter does not provide specific forward-return expectations, but it emphasizes patience as the fund’s core holdings, including KKR, work through cyclical challenges.

Crédito da imagem: Greenhaven Road Capital