Follow Mitt Romney Into Private Equity Stocks Like KKR, FIG & APO?

Mitt Romney has been getting considerable flake for his involvement with private equity firm Bain Capital but you too can directly or indirectly follow Mitt into private equity with stocks like KKR & Co. LP (NYSE: KKR), Fortress Investment Group LLC (NYSE: FIG) and Apollo Global Management LLC (NYSE: APO) – especially if you are not planning to run for President. However, anything related to private equity can be risky not just for would-be politicians because it involves picking winners over losers (like when the government invested taxpayer dollars in Solyndra). So should you follow Mitt Romney in private equity stocks like KKR & Co. LP (KKR), Fortress Investment Group LLC (FIG) and Apollo Global Management LLC (APO) or perhaps it would be better to follow him into Swiss bank accounts and offshore Cayman Islands trusts? Here is a quick glance at all three to help you decide:

KKR & Co. LP (NYSE: KKR) Is Busy Making Deals

KKR & Co. LP is a leading global investment and buyout firm with deep roots in private equity and its CEO, Henry Kravis, has come out to say that Mitt Romney should be proud of his private equity background. Earlier this month, KKR & Co. LP bought German cutlery and coffee machines maker WMF AG (WMFG.F) for around €587 million ($727 million) and the company will seek to expand its business both in the US and Asia while near the end of June, KKR took control Australian healthcare company GenesisCare in a deal that valued the company at up to A$600 million ($602 million). Its also worth noting that at the beginning of July, Oppenheimer raised its rating on KKR & Co. LP to outperform based on the company’s success at monetizing investments from its large 2006 fund that also accounts for close to half of the firm's invested capital – meaning an investment in KKR is a both a bet on the successful exit from past investments and its ability to invest in the right investments for the future. On Wednesday, KKR & Co. LP rose 1.95% to $13.60 (KKR has a 52 week trading range of $8.95 to $16.10 a share) for a market cap of $3.16 billion plus the stock is up 6% since the start of the year, down 13% over the past year and up 40.3% since the middle of 2010. KKR & Co. LP also has a forward dividend of $0.60 for a dividend yield of 4.5% – certainly better than what any bank in the US will pay you (although I am not sure whether its comparable to Mitt’s Swiss bank accounts!).

Fortress Investment Group LLC (NYSE: FIG) Recently Saw Bullish Call Action

Fortress Investment Group LLC is a highly diversified global investment management firm that offers a range of alternative and traditional investment strategies for institutional and private investors worldwide. Investors should be aware that on Monday, it was reported that a bullish investor (or investors) had purchased 5,000 calls that will double in value should the stock rise above the $5 level. On Wednesday, Fortress Investment Group LLC rose 0.80% to $3.76 (FIG has a 52 week trading range of $2.67 to $4.79 a share) for a market cap of $1.93 billion (plus the stock is up 11.2% since the start of the year, down 16.4% over the past year and down 84.6% over the past five years) – meaning the bullish call buyer will still need to be patient. Otherwise and in late June, it was reported that Fortress Investment Group LLC was planning to raise $1 billion for a Japanese property fund by the end of the year plus FIG recently topped Berkshire Hathaway's offer to buy the mortgage business of bankrupt Residential Capital LLC. Otherwise, over 80% of Fortress Investment Group LLC’s alternative Assets Under Management (AUM) is in long-term structures, meaning both stable and predictable management fees, plug FIG has a forward dividend of $0.20 for a dividend yield of 5.4%. 

Apollo Global Management LLC (NYSE: APO) Has a Chairman Who Recently Made Headlines for an Expensive Personal Acquisition

Apollo Global Management LLC raises, invests and manages funds on behalf of pension and endowment funds as well as other institutional and individual investors. Recently, Leon Black, the chairman and founder of Apollo Global Management LLC, made headlines with the acquisition of Edvard Munch’s “The Scream” in an auction for about $120 million. Leon is apparently doing better than shareholders of Apollo Global Management LLC but one has to question the judgment of someone willing to pay $120 for a painting – even a well known one. On Wednesday, Apollo Global Management LLC rose 1% to $13.16 (APO has a 52 week trading range of $8.85 to $17.94 a share) for a market cap of $1.66 billion and the stock is up 6% since the start of the year but its also down 20.2% over the past year. Otherwise, it was recently reported that Apollo Global Management LLC would raise about €2 billion ($2.5 billion) for a fund that will buy loans from European banks plus it was reported that APO was considering a bid to acquire textbook publisher McGraw-Hill Education. Apollo Global Management LLC also has a forward dividend of $0.28 for a dividend yield of 2.20% – not a bad yield but not enough to buy a Munch painting.

The Bottom Line. At the very least and if you don’t plan on running for President like Mitt Romney, investing in private equity stocks KKR & Co. LP (KKR), Fortress Investment Group LLC (FIG) and Apollo Global Management LLC (APO) will result in a nice dividend yield but not necessarily make you any richer.