Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
Introduction & Market Context
KKR & Co. (NYSE:KKR) released its second quarter 2025 financial results on July 31, 2025, showcasing strong performance across key metrics despite subsequent market skepticism. The alternative asset manager reported significant growth in fee-related earnings, assets under management, and capital deployment activities.
Despite beating analyst expectations with adjusted earnings per share of $1.18 compared to the forecast of $1.13, KKR’s stock experienced a decline of 2.59% following the earnings release. This downward trend continued, with the stock closing at $146.06 on August 14, 2025, and showing a further 0.79% decline in pre-market trading on August 15.
Co-CEOs Joseph Y. Bae and Scott C. Nuttall expressed optimism about the company’s trajectory: "We are active globally across investing, monetizing and fundraising. This momentum is flowing through our financial results, with greater than 25% growth in Fee Related Earnings, Total Operating Earnings and Adjusted Net Income on a trailing 12-month basis. We remain highly constructive as we enter the second half of the year."
Quarterly Performance Highlights
KKR delivered impressive financial results in the second quarter of 2025, with significant year-over-year growth across its key performance indicators. Fee Related Earnings (FRE) reached $887 million ($0.98 per adjusted share) in the quarter, representing a 17% increase compared to the same period in 2024. On a trailing twelve-month basis, FRE totaled $3.6 billion ($3.96 per adjusted share), up 34% year-over-year.
Total Operating Earnings (TOE) grew to $1.2 billion ($1.33 per adjusted share) in Q2 2025, a 14% increase from Q2 2024. For the trailing twelve months, TOE reached $4.7 billion ($5.19 per adjusted share), up 26% year-over-year. Adjusted Net Income (ANI) rose to $1.1 billion ($1.18 per adjusted share) in the quarter, up 9% year-over-year, while LTM ANI grew 27% to $4.5 billion ($4.98 per adjusted share).
As shown in the following summary of KKR’s second quarter highlights:
The company’s GAAP results showed total revenues of $5.09 billion for Q2 2025, compared to $4.17 billion in Q2 2024. Net income attributable to KKR common stockholders was $472 million for the quarter, down from $668 million in the same period last year. This comprehensive financial overview demonstrates the company’s strong revenue generation despite some pressure on bottom-line results:
Assets Under Management & Capital Deployment
KKR continued to expand its asset base, with Assets Under Management (AUM) growing to $686 billion, a 14% increase year-over-year. Fee Paying AUM also rose 14% to $556 billion. The firm demonstrated strong fundraising capabilities, raising $28 billion in new capital during the quarter and $109 billion over the trailing twelve months.
Management fees showed robust growth, increasing by 16% to $3.7 billion on a trailing twelve-month basis. This growth was primarily driven by an increase in Fee Paying AUM from organic new capital raised. The company’s Fee Related Earnings margin improved to 69% in the LTM period ending Q2 2025, up from 65% in the comparable period of 2024.
The following chart illustrates KKR’s management fee growth and FRE margin improvement:
The firm’s AUM growth has been consistent across its various asset categories, with particular strength in perpetual capital, which increased 16% year-over-year to $289 billion. Perpetual capital now represents 42% of total AUM and 50% of Fee Paying AUM, providing KKR with a stable, long-term revenue base.
As shown in the following breakdown of KKR’s assets under management:
Capital deployment remained robust, with $18 billion invested during the quarter and $83 billion over the trailing twelve months. The firm maintained $115 billion in uncalled commitments, providing substantial dry powder for future investments. Performance Fee Eligible AUM grew 16% year-over-year to $411 billion, with $252 billion above cost and accruing carry.
Segment Performance
KKR’s Private Equity segment showed strong performance, with AUM increasing 16% year-over-year to $215 billion. The segment generated $392.5 million in Fee Related Earnings and $355.5 million in Realized Performance Income during Q2 2025. Traditional Private Equity investments delivered a 5% return in the quarter and 13% over the trailing twelve months.
The Real Assets segment grew AUM by 18% year-over-year to $179 billion, with $8.2 billion in new capital raised during the quarter. Infrastructure investments returned 3% in Q2 and 14% over the LTM period, while Opportunistic Real Estate returned 3% in the quarter and 7% over the LTM.
Credit and Liquid Strategies saw AUM increase by 10% year-over-year to $292 billion, with $14.3 billion in new capital raised during the quarter. The segment’s Leveraged Credit Composite returned 2% in Q2 and 7% over the LTM, while the Alternative Credit Composite returned 1% in the quarter and 9% over the LTM.
The following table shows KKR’s fund investment performance across various asset classes:
Strategic Initiatives
KKR announced a strategic acquisition of HealthCare Royalty Partners, a middle-market biopharma royalty acquisition company. The transaction, which closed on July 30, 2025, added approximately $3 billion to KKR’s AUM and strengthens the firm’s position in the healthcare investment space.
The company continues to focus on expanding its perpetual capital base, which provides stable, long-term revenue streams. KKR’s insurance segment, primarily through Global Atlantic, contributed significantly to this strategy, with insurance operating earnings of $277.9 million in Q2 2025. Global Atlantic’s AUM totaled $201 billion at quarter-end, of which $149 billion is Credit AUM.
KKR’s Strategic Holdings segment, which includes the firm’s Core Private Equity businesses, generated operating earnings of $29.1 million in Q2 2025. The 18 businesses in this segment produced $4.1 billion in adjusted revenues and $1.0 billion in adjusted EBITDA on a trailing twelve-month basis as of Q1 2025.
Forward-Looking Statements
KKR remains optimistic about its future prospects, targeting over $300 billion in fundraising according to the earnings call. The company expects insurance operating earnings to remain around $250 million per quarter and is exploring opportunities in the 401(k) retirement reform space.
During the earnings call, Co-CEO Scott Nuttall highlighted the company’s strategic positioning amid market volatility, stating, "Uncertainty creates volatility, creates opportunity for us." CFO Rob Lewin emphasized the firm’s long-term investment approach, saying, "We build portfolios for the very long term."
With 93% of its AUM either in perpetual capital or having a duration of at least 8 years at inception, KKR is well-positioned to weather market fluctuations and capitalize on long-term investment opportunities. The company’s declared quarterly dividend of $0.185 per share of common stock reflects its commitment to returning capital to shareholders while maintaining financial flexibility for growth initiatives.
Despite the strong operational performance demonstrated in the Q2 2025 presentation, investors appear cautious, as reflected in the stock’s recent price action. This disconnect between fundamental performance and market reaction may present an opportunity for long-term investors who share management’s constructive outlook on KKR’s growth trajectory.
Full presentation:
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