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# Ares Capital's Yields Are Shrinking (Archive)
- URL: https://www.huntingalphas.com/ares-capitals-yields-are-shrinking-rating-downgrade-archive/
- Published: 2025-02-06T15:50:00.000Z
- Updated: 2026-02-28T11:07:23.000Z
- Description: Shrinking yields, stretched valuations, and rising competition temper my previously bullish ARCC stance.
- 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

- My bullish stance on Ares Capital has outperformed the S&P 500, but I am adopting a more cautious stance after Q4 FY24 results.
- Ares Capital is growing its investment book by outperforming peers in deal activity, particularly through larger disbursements to top borrowers.
- Leading indicators suggest headwinds to net investment income in Q1 FY25 as yields and investment spreads shrink.
- Basel III Endgame deregulations for banks are a looming risk that can increase competition for ARCC and the broader BDC sector.
- ARCC's valuations seem stretched, as it is trading near the top of its historical valuation range. The bullish momentum on ARCC vs. the S&P 500 is also starting to slow down near monthly resistance.

Read the full article [here](https://seekingalpha.com/article/4755538-ares-capital-yields-are-shrinking-rating-downgrade?ref=huntingalphas.com).

#### Disclosures and Disclaimers

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