FBR Capital Reiterates an 'Outperform' on KKR Financial (KFN); Positive Meeting W/Mgmt

September 29, 2009 9:55 AM EDT

FBR Capital reiterates an 'Outperform' on KKR Financial (NYSE: KFN), raises price target from $4 to $6.25.

FBR analyst says, "Last week, we had management on the road for three days to "tell the KFN story" after the noteworthy portfolio actions taken subsequent to 2Q09. The meetings highlighted the significant underlying embedded value of KFN shares, not only in terms of long-term book value upside, but also in terms of the ability, based on the company's irreproducible liability structure, to take advantage of opportunities in corporate credit to create a powerful, and consistently growing, earnings stream over time. With liquidity at the holding company a nonissue, in our opinion, we now expect KFN to begin to dividend out a portion of its earnings stream, perhaps as early as 4Q09. We believe that the market will view a reinstated dividend as a vote of confidence by the manager, KKR. We also believe that as management continues to position the portfolio for earnings growth while preserving, and growing, book value, KFN will warrant a premium valuation to book value."

To see more analyst ratings on KFN Click Here.

KKR Financial Corp., a real estate investment trust and specialty finance company, invests in various asset classes in the United States.

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