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KKR Financial Holdings' CEO Hosts Analyst Day (Transcript)

Before we start to think about KFN and where it is today and where it's going, it helps to understand its past. And I was thinking you know flying over from Europe to New York yesterday, a little bit about where KFN has been and I remember 4.5 years ago when I was in a meeting when Henry Kravis's office here in New York, I saw a sign he had in his office. It said arrogance kills.

I remembered that sign then I flew back to the West Coast after that meeting and I was greeted at the door of my house with my wife, she said you have to talk to your son, he did that thing again. I can't remember what that thing was but it probably involved beating up his little sister.

So I went upstairs and sat on the bed of my son and I asked him what had happened and he said, well daddy because I know you and mommy say don't make the same mistake twice, but I have a big problem, I forget that I make the mistake, can you help me think of a process so I can record and remember when I make mistakes. So I don't do them again.

And so the story of Henry Kravis and the sign in his office and a lesson my son taught me, all really implies a little bit in the context to the history of KFN. We started out in 2004 as a mortgage, it was a corporate structure that allowed us to focus on building our leverage credit capabilities and bank loans and high yield using [CLOs] as financing source, but the problem was that a lot of our assets were in the residential mortgages which we did not have a concrete expertise at the firm, it's lesson number one.

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