Buyout firm KKR gets taste of own medicine as activist ValueAct announces stake

Henry Kravis, co-chairman, co-chief executive officer and co-founder of KKR & Co., arrives for a session of the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, July 6, 2016.

David Paul Morris | Bloomberg | Getty Images

Shares of private equity giant KKR jumped on news Thursday morning that activist investing firm ValueAct has taken out a significant stake.

KKR's stock rose more than 6 percent after ValueAct principal Mason Morfit announced a stake of about 5 percent through derivatives.

Morfit said he believes KKR, co-founded by Henry Kravis, is a bargain now, effectively trading at about 3.5 times earnings.

The comments came from the Active-Passive Investor Summit in New York.

Earlier in the day KKR posted a strong earnings report, with first-quarter profit of 65 cents a share easily beating Wall Street expectations for 50 cents. The company attributed the growth to strong returns in investments.

Investment income came in at $298.7 million, a sharp reversal from a loss of $529.6 million a year ago that came largely due to falling oil prices.

Along with the big profit jump, KKR announced a dividend of 17 cents a share, a 1-cent increase.

— Reuters contributed to this report.