Spending It, Getting Creative, and Payout Yields

Just when everyone is smiling in private equityland, is the party almost over?

Kolberg Kravis Roberts Private Equity Investors $5B fund has invested/committed 90% of its available capital, only 10 months after floating on Euronext. The shares priced at $25 but traded down to the low 20’s and have since recovered to ~$24. (They listed the actual investment fund vs. listing the management company like Blackstone is going to do).

View the chart here

I imagine the new Barclay’s ETF will have an allocation to KKR in addition to many of the same names as the Dow Index. I think this will be a great offering for those interesting in creating a private equity FOF, and not having to trade on the foreign indices.

In other news, Health Shares is rolling out 22 ETFs based on therapeutic categories. Obviously this is a bit gimmicky, but it does allow the investor to allocate to very specific niches. Although, with the current state of the American diet, maybe HHM is a good investment.

Lastly, a good article on “Shareholder Yield” that relates to my Payout Yield post. Priest, who works at Epoch Investment Partners, also has a new book out on the subject. They also have a whole library of white papers on their site I will be delving into. Fairly similar to the O’Shaughnessy version except that it adds paying down debt:

Payout Yield = $ spent on dividends + $ spent on share repurchases
(Net payout is simply subtracting the $ raised through new share issues to the above formula)

Shareholder Yield = $ spent on dividends + $ spent on share repurchases + $ used to pay down debt

So, one could combine the two into a total figure of cash being returned to shareholders. . .thoughts?

Total Yield = $ spent on dividends + $ spent on share repurchases + $ used to pay down debt – $ raised through share issues

Great article from Smart Money here.