"KKR Financial Holdings (KFN) is a leading alternative asset manager; led by its founders, Henry Kravis and George Roberts, KKR specializes in large, complex buyouts," notes Mark Skousen.

The editor of The Hedge Fund Trader explains, "The company's edge is industry-leading private equity experience, in-depth industry knowledge, sophisticated processes for growing and improving businesses and an almost unbeatable information network.

"KKR has a history of landmark achievements in private equity, including the first leverage buyout above the $1-billion mark.

If you are looking for clues telling you which stocks have a good chance of increasing in value, you might want consider watching what insiders are doing. After all, talk is cheap, but when insiders put their own money on the line, you should sit up and take note.

Equity One Inc. (EQY) topped the insider-buying charts for the week ending July 9th as insiders snapped up 900,000 shares of company stock at a market value of $15,210,000. During the past six months, insiders have increased their overall holdings in the company by 1.11% and now own 0.77% of EQY stock.

Analyst Upgrades

• SuperValu (SVU) to buy from hold at Hapoalim.
• Constellation Energy (CEG) to buy from hold at Citigroup.
• Doral Financial (DRL) to neutral from sell and ABB (ABB) to buy from neutral at Sterne Agee.

Analyst Downgrades

• American Eagle (AEO) to neutral from buy at SunTrust.
• Tenet Healthcare (THC) to market perform from outperform at Wells Fargo.

If you're looking to buy into an upswing post-recession, it doesn't look like the private equity market will be on your list. Valuations didn't fall as much as you might think, meaning that the bargains you usually find during a downturn just aren't showing up this time.

In the leveraged buyout market, prices were around 25% higher, on average, than they were in 2001, when the dotcom economy fell apart, according to Standard & Poor's Leveraged Commentary & Data. And transactions closed in the past three months have hit heir highest levels since the private equity market peaked in 2007.

Says Christopher O'Brien, president for U.S. and Europe of Investcorp Bank BSC, another "golden era" isn't coming. He tells Bloomberg News, "There's a lot of pressure to put investors' money to work now, and valuations are still high. It's a seller's market."

Analyst upgrades:

• FBR Capital upgraded Frontline (NYSE: FRO) to Market Perform from Underperform to reflect the company's above-average day rates and alleviated near-term financing pressures. The firm raised its target on shares to $23 from $14.
• Baird upgraded Varian Medical (NASDAQ: VARI) to Outperform from Neutral and said checks at ESTRO meeting indicate European radiation therapy market demand will remain "respectable" in 2010 and that launch of Unique could drive incremental demand in developing markets. The firm has a $49 target on shares.
• Goldman believes GameStop (NYSE: GME) Street expectations are beatable and valuation is attractive. The firm upgraded shares to Conviction Buy from Neutral and has a $28 target.
• Borg-Warner (NYSE: BWA) was upgraded to Outperform from Market Perform at Wells Fargo.
• KKR Financial (NYSE: KFN) was upgraded to Outperform from Market Perform at JMP Securities.
• Cathay Pacific (OTC: CPCAY) was upgraded to Outperform from Neutral at Credit Suisse.

KKR & Co. is a step closer to being publicly traded, now that the board of its Amsterdam-traded buyout fun has given the green light. If a majority of the unitholders in KKR Private Equity Investors LP (OTC: KPE), the listed fund, consent, the transaction could be finished by October 1, 2009.

This would result in KKR's finally reaching an exchange. The private equity fund tried to go public via initial public offering (IPO) in 2007, after the Blackstone Group (NYSE: BX) raised $4.75 billion that way, but market conditions scuttled the attempt.

KKR is one of the oldest and most successful private equities firms in the U.S. The "successful" part may be changing, which puts it in the same boat as a lot of its peers. Shares in Blackstone (NYSE: BX) now trade just above $6, compared to a 52-week high of almost $23 and $35 less than two years ago.

KKR Financial (NYSE: KFN), a spin-out of part of KKR, replaced its CEO and another top officer. According to Reuters, "Last month, KKR Financial suspended its third-quarter dividend as it arranged for more time to pay off its borrowings." Rarely a good sign. Shares of KFN have done much worse than those of Blackstone. The stock has dropped to $0.72 this morning from a 52-week high of $16.78. On the NYSE, that makes it a candidate for delisting.

Firing the CEO at KFN is like putting a band-aid on a mortal wound. Nothing will come of it. The fault of what has happened at the firm is based on the dead market for LBOs and the rapidly falling value of LBOs done over the last three years. KKR may think it looks good to dump the CEO of the unit, but it won't make a difference.

Trying to turn around private equity operations is like trying to turn around big banks. It is not going to work for a year or more, no matter what is done. The cracks in the foundation of the credit world are too systemic. Companies like KKR will have to hope that they can ride it out until there is some recovery in the value of the companies in which they invested.

KFN trades below $1 because the premise that was at the core of taking it public is flawed. The stock will not recover.

Douglas A. McIntyre is an editor at 247wallst.com.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Agilent Technologies Inc. (NYSE: A) topped estimates but offered an outlook below expectations.
• Best Buy Co. (NYSE: BBY) warned that it many not be able to maintain its earnings momentum.
• Charlotte Russe Holding Inc. (NASDAQ: CHIC) was upgraded because of its growth potential.
• Focus Media Holding Ltd. (NASDAQ: FMCN) shares tumbled after it reported Q3 numbers.
• HLS Systems International (NASDAQ: HOLI) earnings prospects and management impressed an analyst.
• JCPenney Co. Inc. (NYSE: JCP) reported a lower Q3 profit and lowered its guidance due to the recession.
• KKR Financial Holdings (NYSE: KFN) disappointing Q3 results led to analyst downgrades.
• MercadoLibre Inc. (NASDAQ: MELI) doubled its Q3 profit and beat earnings expectations.
• Nortel Networks Corp. (NYSE: NT) swung to a Q3 net loss and unveiled further restructuring measures.
• Perry Ellis International Inc. (NASDAQ: PERY) posted preliminary Q3 results and lowered its outlook.
• Siemens (NYSE: SI) Q4 net loss widened and it warned about meeting its profit target for the year.
• Starbucks Corp. (NASDAQ: SBUX) Q4 earnings were hurt by restructuring costs, revenue rose slightly.
• Toll Brothers Inc. (NYSE: TOL) posted dismal Q4 results and declined to offer guidance for next year.
• Tyson Foods Inc. (NYSE: TSN) solid Q4 results fell short of estimates and it offered a shaky outlook.
• Wells Fargo & Co. (NYSE: WFC) earnings prospects following its equity offering led to an analyst's upgrade.

Analyst upgrades:

• Baird upgraded Optimer Pharm (NASDAQ: OPTR) to Outperform from Neutral and raised its target to $13 from $8 citing the decidedly positive data from the OPT-80 trial.
  
• Banc of America upgraded Quest Diagnostics (NYSE: DGX) to Buy from Neutral on valuation and believes management has set expectations well.
  
• Credit Suisse views Jacobs Engineering (NYSE: JEC) as a high quality name given the quality of management, execution track record, and relationship business model. Shares were upgraded to Outperform from Neutral.
• Horizon Lines (NYSE: HRZ) was upgraded to Overweight from Equal Weight at Stephens.
  
• Bancolombia SA (NYSE: CIB) was raised to Buy from Neutral.
  
• Great Lakes Dredge (NASDAQ: GLDD) was upgraded to Buy from Hold at Morgan Joseph.

Analyst downgrades:

KKR Financial (NYSE: KFN), the publicly traded arm of the famous private equity firm, is doing extremely well. The company's net rose to $49 million from $38 million in the same quarter a year ago. It dropped its provisions for loan loss reserves, a sign that its portfolio should be doing well.

It also cut its dividend to zero. The FT says that it is "a sign that the company is husbanding cash amid continuing market turmoil." Put another way, firms that are doing well may cut dividends just in case the economy and their businesses get worse next year.

That is remarkably troubling news, because it puts payouts at risk even at some large companies, especially those with financial divisions or balance sheets with some portion of their assets in risky securities. It also could hurt the chances dividends will be paid at firms with falling cash flows and substantial debt due next year. On the financial unit count GE (NYSE: GE) comes to mind. On the falling cash flow metric, The New York Times (NYSE: NYT) presents a risk.

Being among America's great companies may not count much any more, especially when it comes to sending cash to shareholders every quarter.

Douglas A. McIntyre is an editor at 247wallst.com.

TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime.

There are tons of ridiculous stories that can be written in the Naked City. Notice that every day we are blessed with a story about how there are three private-equity firms examining Lehman Brothers (NYSE: LEH) (Cramer's Take) and Neuberger Berman (NYSE: NEU) (Cramer's Take). I think I have read that story a dozen times now.

You can list them, too: Blackstone (NYSE: BX) (Cramer's Take), KKR (NYSE: KFN) (Cramer's Take), Apollo (NASDAQ: AINV) (Cramer's Take), maybe Cerberus. What are they going to do, deny it? "No, we are not looking at it?" Their investors would love that: "Well what the heck are they doing with our money?" would be the reaction of investors if they issued denials. I predict weeks more of phantom tire-kicking of Lehman by nonexistent private-equity firms.

How about private equity about to swarm over collateralized debt obligations? Usual cast of characters there. Right? Come on, those stories are a penny a dozen. Every day I read about them. But nobody, other than Lone Star, is doing anything, anything at all on this front. If there were buyers, you can bet that Lehman and AIG (NYSE: AIG) (Cramer's Take) wouldn't be in the woods, lost, hopeless, with tons of bad European paper.

MOST NOTEWORTHY: American Capital, Realty Income and KKR Financial were today's noteworthy downgrades:

• Jefferies downgraded American Capital (NASDAQ: ACAS) to Underperform from Hold as they see a disproportionate risk profile in the company's current portfolio when compared to most peers.
  
• Banc of America cut Realty Income (NYSE: O) to Sell from Neutral as they believe the current valuation is not sustainable.
  
• Bear lowered KKR Financial (NYSE: KFN) to Peer Perform from Outperform following the company's announcement that it intends to sell 20M shares in a public offering.

OTHER DOWNGRADES:

• Goldman cut PepsiCo (NYSE: PEP) to Neutral from Buy.
  
• RBC Capital downgraded Avocent (NASDAQ: AVCT) to Sector Perform from Outperform.
  
• JP Morgan removed NICE Systems (NASDAQ: NICE) from its Focus List.

MAJOR PAPERS:

• The Wall Street Journal reported that KKR Financial Holdings LLC (NYSE: KFN), a unit of Kohlberg Kravis Roberts, revived concerns of a credit crunch after it asked for a restructuring of billions of dollars in short-term debt.

OTHER PAPERS:

• According to sources, the Chicago Tribune reported that Deutsche Lufthansa AG (OTC: DLAKY) could look to take an equity stake in a merger between Continental Airlines Inc (NYSE: CAL) and UAL Corporation's (NASDAQ: UAUA) United Airlines.
• The Associated Press reported that the pilots' unions of Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) are unable to agree on how seniority for the companies' pilots would work under a combined carrier. The impasse puts the deal in "serious jeopardy," inside sources reported.

WEB SITES:

• Electronics retailer Sharper Image Corporation (NASDAQ: SHRP) has filed for bankruptcy, citing declining sales and profitability, Bloomberg reported.

U.S. stock futures were significantly lower this morning, indicating U.S. stocks could have a rough start as investors await data on inflation and housing. Despite solid results from Hewlett-Packard after the closing bell Tuesday, renewed concerns about the credit market, oil climbing above $100 a barrel and the uncertainty about the upcoming data pulled futures lower.

Like seemed what was going to be a healthy gains day Tuesday, ended on a down note after oil futures reached the $100 a barrel. The Dow industrials fell nearly 11 points, or 0.09%, the S&P 500 lost over 1 point, or 0.09%, and the Nasdaq Composite dropped 15 points, or 0.67%.

Meanwhile, around 10:30 a.m., weekly crude inventories will be reported. Oil closed for the first time above $100 a barrel Tuesday, but prices retreated somewhat Wednesday to around $99 a barrel. Concerns over a refinery explosion and the possibility that OPEC may cut its output caused oil prices to spike with several other factors remaining in the background.

MOST NOTEWORTHY: Commercial Metals (CMC), KKR Financial (KFN), Career Education (CECO), Ann Taylor (ANN) and Intel (INTC) were today's noteworthy upgrades:

• CIBC upgraded Commercial Metals (NYSE: CMC) to Sector Outperformer from Sector Performer based on valuation.

• KKR Financial (NYSE: KFN) was raised to Outperform from Market Perform at Friedman Billings, following managements detailed conference call and managements prudent and rapid actions to address the sale of its Rambus (RMBS) portfolio.

• Bear Stearns upgraded Career Education (NASDAQ: CECO) to Outperform from Peer Perform based on valuation.

• Ann Taylor (NYSE: ANN) was upgraded to Outperform from Market Perform at Piper Jaffray due to the upside at the company's LOFT division and the firm's belief that there is upside to their 2008/2009 estimates for Ann Taylor.

• Credit Suisse upgraded shares of Intel (NASDAQ: INTC) to Outperform from Underperform based on expected margin expansion, a more benign competitive environment in the MPU sector, better positioning vs. AMD (AMD) at the high-end, and strong demand trends...

OTHER UPGRADES:

• Citigroup upgraded Sovereign Bancorp (NYSE: SOV) to Buy from Hold.

• Network Appliances (NASDAQ: NTAP) was upgraded to Buy from Neutral at Merrill Lynch and Caris raised shares to Buy from Above Average.

• JP Morgan added Continental (NYSE: CAL) to its Focus List. Punk upgraded Washington Mutual (WM) to Buy from Market Perform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).