Key Takeaways
- • Seeking Alpha commentary argues investors should weigh the high costs and risks of owning Ares Capital (ARCC) or any private credit vehicle against 1940 Act-protected closed-end fund preferreds.
- • Ares Management (ARES) trades at roughly 18x forward earnings and 8.7x book value, a growth-stock valuation the author says is becoming harder to justify.
- • ARCC's incentive fee of 20% is cited as a growing point of cost scrutiny as peer discounts widen.
- • The article states that ARES is among the worst-performing private credit advisor equities year-to-date, following a sharp sell-off in private credit stocks the prior week.
Summary
A Seeking Alpha opinion piece cautions investors against adding exposure to Ares Management Corporation (NYSE: ARES) and Ares Capital Corporation (ARCC) as private credit headwinds persist. The author states that both companies were not immune to the private credit sell-off seen the prior week, and that ARES ranks among the weakest-performing private credit advisor equities so far this year.
The article values ARES like a growth stock, at about 18 times forward earnings and 8.7 times book value. The author argues that this pricing, combined with the difficulty of sustaining growth in private credit leadership, makes the valuation harder to defend.
For ARCC, the author highlights the 20% incentive fee as a key cost concern, particularly as peer vehicles trade at discounts. The piece contends that the costs and risks of owning ARCC or any private credit vehicle should be weighed against the best-yielding 1940 Act-protected closed-end fund preferreds, referencing HFRO.PR.A as a comparison point, and that investors should understand the trade-offs between private credit vehicles and fee-free alternatives.
The source is an opinion column and the analysis reflects the author's views rather than independent reporting. The available text is partial, and no deal values, regulatory actions, or management changes are reported.
The article values ARES like a growth stock, at about 18 times forward earnings and 8.7 times book value. The author argues that this pricing, combined with the difficulty of sustaining growth in private credit leadership, makes the valuation harder to defend.
For ARCC, the author highlights the 20% incentive fee as a key cost concern, particularly as peer vehicles trade at discounts. The piece contends that the costs and risks of owning ARCC or any private credit vehicle should be weighed against the best-yielding 1940 Act-protected closed-end fund preferreds, referencing HFRO.PR.A as a comparison point, and that investors should understand the trade-offs between private credit vehicles and fee-free alternatives.
The source is an opinion column and the analysis reflects the author's views rather than independent reporting. The available text is partial, and no deal values, regulatory actions, or management changes are reported.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.