KKR (KKR) Bearish Setup: AI Options Trade Alert

The firm operates in three segments: asset management, insurance, and strategic holdings. The asset management business offers diverse investment strategies including private equity, real assets, and credit, targeting fund investors globally. 'Private Equity' manages funds for long-term appreciation via controlling ownership or strategic minority positions. 'Real Assets' invests in infrastructure, real estate, and energy. 'Credit and Liquid Strategies' invests in corporate debt and collateral-backed investments. Capital Markets provides capital solutions for the firm, portfolio companies, and third parties. Principal Activities manages the firm's own assets. The insurance business, operated by 'Global Atlantic', provides retirement, life, and reinsurance solutions to individuals and institutions, focusing on spread between investment income and policyholder benefits. Strategic Holdings comprises ownership in businesses acquired through the core private equity strategy, targeting longer holding periods and lower risk profiles.

KKR's technical outlook is decidedly bearish. The stock is trading at $118.15, significantly below its 50-day SMA of $131.48 and 200-day SMA (calculated from 9/8/25) of $130.15, confirming a strong downtrend. The EMA_21 at $122.59 also indicates bearish momentum. Momentum indicators further support this view; the MACD is negative (-3.66), with MACDh showing decreasing upward momentum, suggesting a continuation of the downtrend. The RSI is at 36.48, indicating oversold conditions, however, this may simply mean the stock is likely to continue lower. The Stochastic Oscillator (STOCHk at 20.06 and STOCHd at 22.17) also corroborates the oversold condition, but doesn't signal an imminent reversal. The ADX is elevated at 26.39, reflecting the strength of the current downtrend. The ROC_20 is deeply negative at -7.28, highlighting the extent of the recent price decline. The BBP is at 0.19, suggesting that the price is nearing the lower Bollinger Band, typically a short term oversold signal, but given the other indicators, the price is likely to continue its decline. Overall, the technical indicators point to continued bearish momentum for KKR in the short to medium term.

KKR's MD&A presents a complex picture of the firm's performance. Total revenues increased by $916.9 million to $5,088.8 million for the three months ended June 30, 2025, driven by a $274.7 million increase in Asset Management and Strategic Holdings revenues and a $642.2 million increase in Insurance revenues. Management fees increased by $148.5 million to $995.8 million, primarily due to new management fees at North America Fund XIV and Global Infrastructure Investors V. However, the firm's net income attributable to KKR & Co. Inc. Common Stockholders decreased by $195.5 million to $472.4 million. From a cash-flow perspective, net cash provided by operating activities was $3.0 billion for the six months ended June 30, 2025, compared to $4.9 billion for the same period in 2024. This $1.9 billion decrease is notable. The firm also issued Series D Mandatory Convertible Preferred Stock (net of issuance cost) of $2.5 billion during the six months ended June 30, 2025. The Business Environment section notes 'elevated levels of market volatility and uncertainty driven principally by geopolitical and global trade concerns', which 'may have various impacts, including on the valuations of certain of our and our investment vehicles' investments, the pace and volume of our capital market transactions, deployments, and realizations, and our fundraising activities.' This cautious outlook suggests potential headwinds for KKR's future performance.

KKR's Q2 2025 earnings call projects a moderately bullish outlook, underpinned by strong fundraising and deployment activity. Management highlighted consistent results, with CFO Rob Lewin stating that their model 'continues to deliver consistent results'. Fee-related earnings reached $0.98 per share, with management fees up 18% year-over-year, driven by Americas XIV turning on. The company deployed nearly $37 billion of capital since the start of the year and maintains a healthy pipeline with $115 billion of uncalled capital. Fundraising momentum is evident, with $28 billion raised in Q2 and K-Series AUM growing significantly to $25 billion from $11 billion a year ago. The insurance segment also performed well, exceeding expectations with $278 million in operating earnings. Scott Nuttall expressed confidence in achieving their 2026 guidance, citing constructive discussions with institutional investors and the trend of institutions consolidating relationships. While the environment is volatile, KKR emphasizes the durability of its recurring earnings streams, suggesting continued growth and stability.

KKR's financial performance presents a somewhat positive picture, though with some areas of concern. Revenue has fluctuated, beginning at $9.6B in Q1 2024, dipping to $3.2B in Q3 2023, and ending at $5.09B in Q2 2025. The gross profit ratio has been highly variable, ranging from -0.027 in Q1 2025 to 0.49 in Q3 2023, indicating inconsistent profitability. Operating cash flow has also been volatile, with a high of $3.36B in Q2 2024 but a low of -$2.64B in Q2 2023, before recovering to $2.55B in Q1 2025. Total debt has remained relatively stable, fluctuating between $46.9B and $50.8B across the quarters. The most recent quarter shows a net income of $472M. While the company demonstrates an ability to generate substantial revenue and positive operating cash flow in certain quarters, the inconsistency in these key metrics warrants caution. The stability of the debt level is a positive sign, but the volatile profitability and cash flow could pose risks in the near term.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.