For nearly a decade, the stock market seemed to move nearly straight up. After a gut-wrenching downturn during the financial crisis, the market's rebound was just about the last thing that investors would have expected -- but it was extremely good news for private equity companies like KKR (KKR 0.23%), which sought to take advantage of long-term opportunities in distressed assets to produce substantial profits.

Coming into Friday's fourth-quarter financial report, KKR investors were prepared to see losses under generally accepted accounting principles (GAAP), but they wanted signs of growth in distributable earnings and assets under management. KKR did a good job of weathering the downturn, and with 2019 starting on a strong note, investors are more excited than ever about its prospects.

Wall Street road sign in front of New York Stock Exchange.

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How KKR finished 2018

KKR's fourth-quarter results showed the impact of the downturn. Total revenue, which for companies in this sector incorporates the negative impact of capital allocation-based losses, was actually negative, but revenue from fees and other sources were up 27% from the year-earlier quarter, to $541.6 million. After-tax distributable earnings came in at $460.1 million, up 24% from the fourth quarter of 2017, which worked out to $0.55 per share. That was well above the $0.50 per share consensus forecast among investors.

In terms of fundamental metrics, KKR remained solid. Assets under management finished the year at $194.7 billion, which was up nearly 16% from where they started 2018. The number was flat over the past three months, as $11.3 billion in new capital raised was almost completely offset by market losses and distributions to private equity fund investors. Fee-paying asset levels climbed by nearly $24 billion, to $141 billion, and management fees jumped $45 million, to $279.4 million. The final result for the year was a 10% boost in book value, to $15.57 per share as of the end of the year.

An essential part of KKR's success came from its funds' ability to outperform a tough market. Even as U.S. and global stocks were down for the year, KKR's four main asset classes all produced positive returns, including a 2% gain for the private equity flagship funds and returns of 7% to 9% for its alternative credit and real asset strategies. Even the leveraged credit realm, which came under pressure late in the year, managed a 1% gain.

Check out the latest KKR earnings call transcript.

Can KKR stay strong in 2019?

KKR is optimistic about its future, arguing that the down quarter actually gave it a great chance to put money to work. "Through our integrated model -- the combination of our investment funds, balance sheet, and capital markets capabilities, and the creativity of our investment teams," said co-CEOs Henry Kravis and George Roberts, "we had an active deployment quarter investing and syndicating over $10 billion of capital on behalf of our limited partners and clients on a global basis."

Meanwhile, for investors, the organizational change that KKR made at midyear in 2018 has made their investment a bit easier to follow. The private-equity giant converted its business form from a partnership to a corporation as of July 1, thereby simplifying how investors will handle the investment going forward. Although longtime investors will still get a final K-1 around the end of March to cover the partial year as a partnership, KKR investors will also get a 1099-DIV reflecting the dividends paid on their shares during the second half of 2018. In future tax years, the 1099-DIV is the only form they'll get.

KKR shareholders were quite pleased with the results, and the stock climbed nearly 5% on Friday following the morning announcement. It's too early to be sure if 2019 will provide a complete turnaround for the stock market, but January has gotten off to a good start, and investors hope that KKR will benefit from its aggressive moves to take advantage of favorable market conditions.