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# Ares Capital: Rising Rates Make Up For Activity Slowdown (Archive)
- URL: https://www.huntingalphas.com/ares-capital-rising-rates-make-up-for-activity-slowdown-archive/
- Published: 2023-07-10T13:30:00.000Z
- Updated: 2026-02-26T15:36:16.000Z
- Description: Rising rates turbocharge ARCC’s floating-rate portfolio despite a sluggish deal pipeline.
- Author: Vish (Hunting Alphas)
- Tags: 5-Minute Pitches, #noindex, Archive, #sa-origin, ARCC, Financials

*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

- The BDC sector is not in the most upbeat shape, but Ares Capital is well positioned.
- Investment activity is slowing down as evidenced by falling gross funding and gross commitment data along with management commentary indicating a dearth of investment opportunities.
- But rising rates are a more powerful tailwind for Ares Capital's floating-rate-dominated investment portfolio. Further rate hikes are likely to provide further propulsion, increasing investment yields.
- The quality of the portfolio is steadily improving as the mix and incidence of the highest investment grade companies increase. An increasing weighted average EBITDA also signals portfolio resiliency.
- I anticipate increasing net investment income to lead to a jump in NAVs in Q2 FY23, driving upsides in the valuations and stock prices.

Read the full article [here](https://seekingalpha.com/article/4616001-ares-capital-rising-rates-make-up-for-activity-slowdown-rating-upgrade?ref=huntingalphas.com).

#### Disclosures and Disclaimers

**Past performance ≠ future results. Not investment advice. See* [**full Disclaimer*](https://www.huntingalphas.com/disclaimer/)**.*