Ares Capital: Bullish Due To Higher Deal Activity (Archive)
Bullish on Ares Capital as record deal flow and floating-rate mix drive upside potential.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Deal activity is growing both in number and average size. The backlog and pipeline numbers are also at record highs.
- A higher floating rate debt mix positions ARCC well for rate cuts ahead in 2025.
- Valuations are at a small premium vs BDC peers, but it may be justified given ARCC's market-leading position amid a positive deal flow environment.
- On ARCC vs SPX 500, buyers are in accumulation and may be ready to launch up soon, leading to outperformance.
- It is important to track the tradeoffs between deal signing volumes, investment yields and portfolio grades to evaluate ARCC execution quality.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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