Group 1 - Ares Management Corporation (ARES) has experienced a significant decline of approximately 14.5% since a Buy rating was issued in October [1] - The focus is on identifying undervalued companies with strong fundamentals and cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - Energy Transfer is highlighted as a company that was previously overlooked but is now considered a valuable investment opportunity [1] Group 2 - The analysis emphasizes a long-term value investing approach while also exploring potential deal arbitrage opportunities [1] - There is a clear preference for businesses that are easily understandable, avoiding high-tech and certain consumer goods sectors [1] - The article aims to foster a community of investors seeking superior returns and informed decision-making through platforms like Seeking Alpha [1]

Core Viewpoint - Ares Management Corporation is experiencing significant growth in assets under management and fundraising, positioning itself strongly in the alternative investment sector, with a favorable price target set by Deutsche Bank indicating potential upside for investors [1][2][6]. Group 1: Financial Performance - Ares Management's assets under management (AUM) surpassed $622 billion, reflecting a 29% increase year over year [2][6]. - The company achieved a record $113 billion in fundraising, showcasing its ability to attract significant capital [2]. - The wealth management division saw AUM rise by 69% year over year to over $66 billion, driven by the acquisition of GCP [3][6]. - Ares Management reported a 20% year-over-year increase in its first-quarter 2026 common dividend, indicating robust financial health [4]. Group 2: Market Position and Stock Performance - Ares Management competes with major firms like Blackstone and KKR, highlighting its strong market position [1]. - Deutsche Bank set a price target of $155 for ARES, suggesting a potential upside of 27.18% from its current trading price of $121.87 [1][6]. - Despite a recent decrease of $15.35, or approximately -11.19%, ARES stock has fluctuated between a low of $119.47 and a high of $132.93 during the trading day [5].

Core Insights - Ares Management Corporation is a leading global alternative investment manager specializing in credit, private equity, and real estate investments, competing with firms like Blackstone and KKR [1] - Deutsche Bank upgraded ARES from a "Hold" to a "Buy" rating on February 6, 2026, with the stock priced at $121.87 at that time [1] Financial Performance - In 2025, Ares Management reported assets under management (AUM) exceeding $622 billion, reflecting a 29% increase from the previous year [2][6] - The company achieved a record $113 billion in fundraising, indicating strong market position and strategic expansion efforts, including the acquisition of GCP [2] - The wealth management sector saw AUM grow by 69% year over year to over $66 billion, showcasing robust financial performance and optimism for future growth [3] - Ares announced a 20% year-over-year increase in its first-quarter 2026 common dividend [3][6] Stock Performance - Despite strong performance indicators, ARES stock has decreased by $15.35, or approximately -11.19%, with a current price of $121.87 [4][6] - The stock has fluctuated between $119.47 and $132.93 during the trading day, with a yearly high of $195.26 and a low of $110.63 [4] - Ares Management's market capitalization is approximately $40 billion, with a trading volume of 10.93 million shares on the NYSE [5]

Group 1 - The credit specialist identified potential opportunistic loans to software companies as investor fears lead to a decline in their share prices [1]

Market Overview - The market is experiencing a strong bifurcation, with indices reaching new all-time highs while the private equity and credit sectors are facing significant challenges [1] Investment Strategy - Trapping Value is a team of analysts with over 40 years of combined experience focused on generating options income and capital preservation [2] - The Conservative Income Portfolio, managed in partnership with Preferred Stock Trader, features two income-generating portfolios and a bond ladder [2] - The Covered Calls Portfolio aims to provide lower volatility income investing with an emphasis on capital preservation [2] - The fixed income portfolio targets securities with high income potential and significant undervaluation compared to peers [2]

Core Insights - Ares Management Corporation's fourth-quarter 2025 after-tax realized income per share was $1.45, missing the Zacks Consensus Estimate of $1.71, but increased from $1.23 per share in the prior-year quarter [1][8] - The company's shares fell nearly 7.3% in early trading following the disappointing results [1] Financial Performance - Net income attributable to Ares Management was $54.2 million, down from $177.3 million in the year-ago quarter [2] - For the full year 2025, after-tax realized income per share was $4.76, missing the Zacks Consensus Estimate of $5.07, but up from $3.97 in the prior year [3] - Total revenue for the fourth quarter declined 5.6% year over year to $1.17 billion, missing the Zacks Consensus Estimate of $1.63 billion [4] - Full-year revenues reached $5.6 billion, a 44.1% increase year over year, surpassing the Zacks Consensus Estimate of $4.8 billion [4] - Total expenses rose 27.3% year over year to $1.25 billion, driven by increases across all components [4] Assets Under Management (AUM) - Fee-paying AUM increased 31.5% year over year to $384.9 billion, while perpetual capital AUM rose 49.7% year over year to $200 billion [5] - Total AUM as of December 31, 2025, was $622.5 billion, up 28.5% from a year ago, supported by commitments to drawdown funds and acquisitions [5][8] Liquidity Position - As of December 31, 2025, Ares Management had $488.9 million in cash and cash equivalents and $2.6 billion in debt [6] Recent Developments - Ares Management completed the acquisition of BlueCove Limited, enhancing its capabilities in systematic fixed-income investing [7][9] - The integrated BlueCove business now operates within the Ares Credit Group, leveraging data-driven investment processes [9] Strategic Outlook - Ares Management is benefiting from strong AUM growth across fee-paying and perpetual capital platforms, supported by capital inflows and strategic acquisitions [10]

Financial Data and Key Metrics Changes - Ares Management achieved a record $994 million in management fees for Q4 2025, totaling $3.7 billion for the full year, reflecting a 27% and 25% year-over-year growth respectively [30] - Fee-related earnings (FRE) for the full year increased by 30%, with a record $528 million in Q4, and FRE margins improved to 41.7% [32] - Realized income for Q4 reached a record $589 million, exceeding $1.8 billion for the full year, marking a 26% increase from 2024 [34] Business Line Data and Key Metrics Changes - The wealth management business saw AUM grow to over $66 billion, a 69% increase year-over-year, driven by strong performance across various strategies [9] - The real estate group raised more than $16 billion for the year, including over $7 billion in Q4, with significant commitments in various funds [19] - The secondaries group raised $12.9 billion for the full year, with AUM increasing by 45%, nearly doubling in size since the acquisition of Landmark [23] Market Data and Key Metrics Changes - Ares Management's total AUM reached over $622 billion, a 29% increase year-over-year, with significant fundraising activities contributing to this growth [7] - The company reported a record $36 billion in fundraising for Q4, contributing to a total of $113 billion for the year [6] - Deployment across real assets more than doubled from approximately $10 billion in 2024 to over $23 billion in 2025 [11] Company Strategy and Development Direction - Ares Management is focused on expanding its investment platform and geographic reach, with strategic enhancements including new products and operational efficiencies [9] - The acquisition of GCP has positioned Ares as a top three global owner and operator of industrial real estate, enhancing its real estate and digital infrastructure offerings [9] - The company aims to leverage its diversified product suite to capture growth opportunities across various asset classes and geographies [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving transaction environment and pent-up demand for private equity sponsors seeking liquidity solutions [12] - The company anticipates strong demand for its investment strategies in 2026, supported by a substantial dry powder of $156 billion [29] - Management highlighted the resilience of its credit portfolios, with strong fundamentals and improving metrics across various strategies [46] Other Important Information - Ares Management plans to launch its fourth U.S. Senior Direct Lending Fund later in 2026 and its seventh European Direct Lending Fund in early 2027 [18] - The company has initiated over 25 AI projects aimed at enhancing investment decision-making and operational efficiency [9] - Ares has been added to the S&P 500 Index, reflecting its growth and market position [9] Q&A Session Summary Question: Impact of software AI disruption on deployment efforts - Management expressed confidence in their software investments, emphasizing the differentiation between various software companies and their resilience against disruption [49][51] Question: Wealth channel performance and sentiment - Management noted strong flows in January and February, with broad-based demand across private credit and core infrastructure products, indicating a positive sentiment despite market volatility [56][62] Question: Outlook for fundraising and deployment in real assets and secondaries - Management confirmed plans for significant fundraising in their flagship credit vehicles, with expectations for strong deployment opportunities in real estate and secondaries [68][70]

Ares Management (NYSE:ARES) Q4 2025 Earnings call February 05, 2026 11:00 AM ET Company ParticipantsCraig Seigenthaler - Managing DirectorGreg Mason - Co-Head of Public Markets Investor RelationsJarrod Phillips - CFOMichael Arougheti - CEOMichael Cyprys - Managing Director and the Head of U.S. Brokers, Asset Managers, and Exchanges ResearchMitchell Goldstein - Company RepresentativeConference Call ParticipantsAlex Blostein - Managing Director and Senior AnalystBenjamin Budish - Research AnalystBill Katz - M ...

Financial Data and Key Metrics Changes - Ares Management achieved a record $994 million in management fees for Q4 2025, totaling $3.7 billion for the full year, representing a 27% increase quarter-over-quarter and a 25% increase year-over-year [28] - Fee-related earnings (FRE) for the full year increased by 30% compared to the prior period, with a record FRE of $528 million in Q4, reflecting a 33% year-over-year growth [31] - Realized income for Q4 reached a record $589 million, with full-year realized income exceeding $1.8 billion, marking a 26% increase from 2024 [34] Business Line Data and Key Metrics Changes - The wealth management business saw AUM grow to over $66 billion, a 69% increase year-over-year, driven by strong performance across semi-liquid wealth products [7][22] - The real estate group raised more than $16 billion for the year, including over $7 billion in Q4, with significant commitments in various real estate strategies [18] - The secondaries group raised $12.9 billion for the full year, with AUM increasing by 45%, nearly doubling in size since the acquisition of Landmark [21] Market Data and Key Metrics Changes - Ares Management's total AUM reached over $622 billion, a 29% increase year-over-year, with $113 billion in total fundraising for 2025 [5] - The company reported a record $46 billion in deployment for Q4, with full-year gross deployment totaling $146 billion, a 37% increase over 2024 [6] - The private equity business reported organic portfolio company EBITDA growth of 13% for the last 12 months in its latest fund, ACOF Six [10] Company Strategy and Development Direction - Ares Management is focused on expanding its investment platform and geographic reach, with significant investments in new data systems and AI projects to enhance decision-making and operational efficiency [7][8] - The acquisition of GCP has positioned Ares as a global top three owner and operator of industrial real estate, contributing to the growth of its real estate and digital infrastructure offerings [7] - The company aims to leverage its diverse strategies across asset classes and geographies to capture growth opportunities, particularly in real assets and secondaries [68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving transaction environment and pent-up demand for private equity sponsors seeking liquidity solutions, supported by a large inventory of seasoned assets and an improving interest rate environment [12][13] - The company anticipates 2026 to be a significant year for realizing European-style performance fees, with expectations for substantial growth in fee-related performance revenues [28] - Management highlighted strong fundamentals across credit portfolios, with loan-to-value ratios near historical lows and improving interest coverage [34][43] Other Important Information - Ares Management declared a 20% year-over-year increase in its first quarter 2026 common dividend to $1.35 per share [3] - The company has a substantial dry powder of $156 billion, positioning it well for future investments [27] - Ares is well-prepared to navigate market challenges, including potential risks from AI disruptions, with a diversified portfolio and strong fundamentals [42][43] Q&A Session Summary Question: Impact of software AI disruption on deployment efforts - Management expressed confidence in their software investments, emphasizing the diversification and stability of their portfolio, and noted that the disruption would not significantly impact overall origination volumes [47][50] Question: Wealth channel performance and sentiment - Management reported strong flows in January and February, with broad-based demand across private credit and core infrastructure products, indicating resilience in the wealth channel despite some cyclicality [54][59] Question: Outlook for real assets and secondaries - Management highlighted ongoing growth in real estate and secondaries, with expectations for significant fundraising and deployment opportunities in these areas [64][71]

Core Viewpoint - An aggressive sell-off in the stock market is driven by investor fears that AI will disrupt the software industry, affecting major money management firms on Wall Street [1] Company Insights - Blue Owl reported $300 billion in assets under management (AUM) for the first time, but its stock fell about 4% following quarterly results, leading to a total stock loss of 27% over the past month [3] - Blue Owl's exposure to software loans constitutes 8% of its total assets, with approximately half of its AUM in its private credit platform [4] - Co-CEO Marc Lipschultz emphasized that significant losses would require a drastic 70% devaluation of software companies, which is not supported by current market fundamentals [5] Industry Context - Ares Management, a competitor, reported that its investment exposure to the software industry is less than 9% of its total private credit assets, with AUM exceeding $600 billion, of which over $400 billion is in its credit platform [6] - UBS strategists highlighted that private credit loans face the highest default-rate risk compared to other credit market segments in scenarios of aggressive disruption [5]