Group 1 - The article promotes a subscription service called "The Dividend Dogcatcher," which offers insights into dividend stocks and investment opportunities [1] - It highlights a daily live video show hosted by Fredrik Arnold on Facebook, focusing on potential portfolio candidates [1] - The article encourages audience engagement by inviting comments on stock tickers for future reports [1]

Core Insights - The article discusses the investment positions held by the analyst in specific companies, indicating a long position in ARCC, OBDC, and BXSL, which may suggest confidence in these stocks' future performance [1]. Group 1 - The analyst has a beneficial long position in the shares of ARCC, OBDC, and BXSL, indicating a positive outlook on these investments [1]. - The article emphasizes that the opinions expressed are solely those of the analyst and not influenced by any external compensation [1].

Core Insights - The article discusses the investment positions held by the analyst in specific companies, indicating a long position in ARCC, OBDC, and BXSL, which suggests a positive outlook on these stocks [1]. Group 1 - The analyst has a beneficial long position in the shares of ARCC, OBDC, and BXSL, indicating confidence in their future performance [1]. - The article emphasizes that the opinions expressed are solely those of the analyst and not influenced by external compensation [1].

Core Insights - Ares Capital reported strong financial results for 2025, achieving record levels of new investment commitments and maintaining a stable dividend yield of 10% [1][2] Financial Performance - In Q4, Ares Capital generated $0.50 per share in core earnings, exceeding its quarterly dividend of $0.48 per share, continuing a trend of core earnings surpassing dividend payments [2] - For the full year, core earnings were reported at $2.01 per share, which also covered the $1.92 per share in dividends paid [2] Investment Commitments - Ares Capital made $5.8 billion in new investment commitments in Q4 across 30 new portfolio companies and 84 existing ones, with 80% being first-lien, senior-secured loans [3] - The company exited $4.7 billion in investment commitments during the same period, resulting in a record total of $15.8 billion in gross commitments for the year, while exiting $12.1 billion [3] Portfolio Valuation - The investment portfolio was valued at $29.5 billion at year-end, an increase from $26.7 billion at the end of 2024, encompassing 602 portfolio companies [4] Balance Sheet Strength - Ares Capital enhanced its balance sheet by adding a record $4.5 billion in new debt commitments while maintaining sufficient liquidity for new investments [5] Early 2026 Performance - The company has made $1.4 billion in new investment commitments through late January 2026, with $709 million in commitments exited, and has an additional $2.2 billion in potential investments in its backlog [6] - Ares Capital estimates carrying forward $1.38 per share of excess taxable income from the previous year for distribution in 2026, providing a cushion for its dividend payments [7]

Core Insights - Ares Capital Corporation (ARCC) shares increased by 2.3% after the announcement of its fourth-quarter and full-year 2025 results, with quarterly core earnings of 50 cents per share meeting the Zacks Consensus Estimate, although this represented a 9.1% decline from the prior-year quarter [1][8] Financial Performance - GAAP net income for the fourth quarter was $293 million or 41 cents per share, down from $357 million or 55 cents per share in the prior-year quarter [2] - For the full year 2025, core earnings per share were $2.01, beating the consensus estimate by a penny but declining 13.7% year over year; GAAP net income was $1.3 billion or $1.86 per share, down from $1.52 billion or $2.44 per share in 2024 [2] Investment Income and Expenses - Quarterly total investment income was $793 million, an increase of 4.5% year over year, driven by higher capital structuring service fees, interest income from investments, and other income; however, it fell short of the Zacks Consensus Estimate of $796 million [3][8] - For 2025, total investment income rose 2.1% to $3.05 billion, missing the Zacks Consensus Estimate of $3.06 billion [3] - Total quarterly expenses were $406 million, up 4.9%, primarily due to higher interest and credit facility fees and base management fees [4] Portfolio Activities - In the fourth quarter, Ares Capital made gross commitments of $5.83 billion to new and existing portfolio companies, an increase from $3.75 billion in the prior-year quarter [5] - The company exited $4.75 billion of investment commitments in the reported quarter compared to $2.75 billion a year ago [5] - The fair value of Ares Capital's portfolio investments was $29.5 billion as of December 31, 2025 [5] Balance Sheet Strength - As of December 31, 2025, cash and cash equivalents totaled $638 million, up from $635 million as of December 31, 2024 [6] - Ares Capital had $5.5 billion available for additional borrowings under existing credit facilities, with total outstanding debt at $16 billion [6] - Total assets were $31.24 billion, and stockholders' equity was $14.32 billion, with a net asset value of $19.94 per share, up from $19.89 as of December 31, 2024 [6] Market Outlook - Growth in total investment income is expected in the near term due to rising demand for customized financing and lower rates; increased investment commitments are likely to support ARCC's financials [9] - However, expansion strategies may lead to rising costs, and regulatory constraints pose a significant challenge [9]

Core Viewpoint - The recent selloff in software stocks reflects concerns over the disruptive potential of AI, particularly large language models (LLMs), which have shifted from being a supportive factor to a potential threat for established companies in the sector [1][2][9]. Group 1: Market Performance - The S&P 500 software and services index fell nearly 4% on Tuesday and an additional 0.73% on Wednesday, marking six consecutive sessions of losses and erasing approximately $830 billion in market value since January 28 [1][11]. - The software sector has declined nearly 13% over six sessions and is down 26% from its peak in October [11]. - Major technology companies, including Nvidia, Meta Platforms, Alphabet, and Oracle, experienced significant declines, with Nvidia dropping 3.4% and Oracle falling 5.1% [14][18]. Group 2: AI Disruption Concerns - The selloff was triggered by a new legal tool from Anthropic's Claude LLM, which highlights the increasing encroachment of LLMs into the application layer of enterprise businesses [2][3]. - Analysts express concerns that the success of AI LLMs is not guaranteed due to their lack of specialized data crucial for various industries [8]. - The competitive landscape for established companies is perceived to be narrowing as AI products gain traction, raising fears about their long-term viability [10][18]. Group 3: Broader Market Implications - The decline in software stocks has broader implications for asset managers, with concerns that weakness in the software sector could lead to credit issues for alternative asset managers [12]. - A group of asset managers, including Apollo and Blackstone, saw their shares fall between 3% and 11% due to these concerns, although they recovered slightly on Wednesday [12]. - The overall market also faced pressure, with the S&P 500 and Nasdaq Composite losing 0.51% and 1.51%, respectively [14]. Group 4: Expert Opinions - Nvidia's CEO stated that fears of AI replacing software are "illogical," suggesting that the market may be overreacting to the potential of AI [15][18]. - Analysts from JPMorgan and The Wealth Consulting Group argue that the selloff may be exaggerated, positing that improved AI tools could enhance software development and margins rather than replace them [16][17].

Looking ahead, Lem said changes in base rates typically take about a quarter to be fully reflected in results, and the decline in base rates during the fourth quarter is expected to create roughly $0.01 per share of earnings headwind in the first quarter of 2026, “assuming all else equal.” He also reminded investors that origination volumes and related capital structuring service fees tend to be seasonally slower in the first quarter than in the fourth.Core earnings per share were $0.50 in the fourth quarte ...

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Core View - Ares Capital Corporation (ARCC) reported strong financial results for 2025, with core earnings per share (EPS) of $2.01 for the full year, fully covering dividends and achieving a return on equity (ROE) exceeding 10% [5][20]. - The company ended 2025 with a net asset value (NAV) per share of $19.94, reflecting a modest increase from the previous year [21]. - ARCC's portfolio remains well-diversified, with over 600 borrowers and a record $29.5 billion in total portfolio at fair value, marking a 10% increase year-over-year [29][30]. Financial Performance - Core EPS for Q4 2025 was $0.50, consistent with the previous quarter but down from $0.55 a year ago, primarily due to declining base rates [19]. - GAAP net income per share for 2025 was $1.86, down from $2.44 in 2024 [19]. - The company generated over $470 million in gross gains from its equity co-investment portfolio during 2025, with an average internal rate of return (IRR) exceeding 25% [12][13]. Investment Activity - ARCC achieved a record $15.8 billion in new investment commitments for 2025, with over $5.8 billion originated in Q4 alone, representing a 50% increase from 2024 [28]. - The majority of new lending activity in 2025 came from incumbent borrowers, with a significant increase in transaction activity in the second half of the year [6][8]. - The company added over 100 new borrowers to its portfolio in 2025, a new record, reflecting its broad market reach and specialized industry verticals [8][9]. Portfolio Quality - The average portfolio leverage decreased by approximately a quarter turn of EBITDA from the prior year, with an average interest coverage ratio improving to 2.2 times [11][31]. - Non-accruals at cost remained stable at 1.8%, well below historical averages, indicating strong credit quality [35]. - The weighted average organic EBITDA growth rate of ARCC's borrowers was over three times that of GDP, demonstrating robust performance relative to the broader market [11]. Market Outlook - The company remains confident in its competitive advantages, including its experienced team and strong market relationships, which are expected to support future performance [6][7]. - ARCC anticipates continued growth opportunities from strategic investments and a healthy credit performance outlook, despite potential headwinds from lower short-term interest rates [17][20]. - The company is well-positioned to capitalize on market opportunities, supported by a diversified capital base and a strong liquidity position of over $6 billion [25][26]. Dividend Outlook - ARCC plans to maintain its dividend level, supported by a strong earnings power and over two quarters of spillover income available for distribution [26][15]. - The first quarter 2026 dividend is set at $0.48 per share, continuing a track record of stable or increasing dividends for 66 consecutive quarters [26]. - The company believes its current dividend level is achievable in the prevailing interest rate environment [15].

Ares Capital (NasdaqGS:ARCC) Q4 2025 Earnings call February 04, 2026 12:00 PM ET Company ParticipantsBrian McKenna - Director of Equity ResearchJana Markowicz - Partner and COOJim Miller - Partner and PresidentJohn Stilmar - Partner and Co-Head of the Ares Public Markets Investor RelationsKort Schnabel - Partner, Co-Head for US Direct Lending, and CEOScott Lem - CFOConference Call ParticipantsArren Cyganovich - Managing Director and Senior Equity Research AnalystCasey Alexander - Managing Director and Senio ...