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Whale Week: The King of Private Equity

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Forget Shark Week on that other cable channel. For the next 5 days CNBC’s Fast Money is bringing you Whale Week. Of course we’re talking about the biggest movers and shakers on Wall Street – aka “whales.” We profile their investment styles and then you trade in their wake. On Monday, we present - The King of Private Equity.

Whale: Henry Kravis
Species: Private Equity
Prey: Anything That Moves
Biggest Kills: TXU, HCA, RJR Nabisco, First Data Corp.
Source: Dealogic

The legendary Henry Kravis is one of the most vicious whales of the private equity species circling the corporate seas today. Weighing in at nearly $3 billion, he sports an urbane exterior than masks the heart of a fearsome predator - gobbling up prey with a ruthless cunning.

His preferred method of kill: the leveraged buyout - a technique he pioneered in the late 70s. It involves devouring weak or undervalued assets, using debt to fund the kill, and later spitting them out at a profit.

His prey has no single defining characteristic; he is attracted simply to any company floundering in the water, giving off strong cash flows.

His most notable acquisition: the $25 billion dollar buyout of consumer conglomerate RJR Nabisco in 1989, which was immortalized in the book Barbarians At The Gate.

But time has not dulled this Whale's appetite. Witness this year's $29 billion purchase of credit card processor First Data.

KKR also led the group that devoured utility giant TXU Corp this year. At $44 billion, it is the biggest buyout kill of all time.

Beyond the corporate brashness exits a deep appreciation for the finer things in life: his collection of corporations is rivaled only by his collection of art. Kravis' wife is the president of the Museum of Modern Art. And in September of 2005, the Kravis' shelled out an estimated $25 million for Matisse's 1948 "The Plum Blossoms." - and donated the painting to the MOMA - proving that even killer whales have a heart.

Eric Bolling recommends going to KKR’s website and checking out what companies they own. He suggests those companies might be smart investments for you, too.

Jeff Macke says the trade is Sun Microsystems (SUNW) because KKR is in this company for the long term.


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Trader disclosure: On Aug 6 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (ATVI), Seymour Owns (AAPL) (BX), (EEM), (EWZ), (EWT), (GLD), (ITU), (LEH), (MBT), (SSL): Red Star Asset Management Owns (EEM): Bolling (SZE), (VE), (MPEL), Owns Gold, Silver, Platinum, Copper, Bolling Is Short (FXI) But Bullish Long-term