I rate Ares Management Corporation (NYSE: ARES ) a Hold for capital appreciation-focused investors who are looking for long-term buy-and-hold investments. The stock went public in 2014 and has been on an incredible tear to recordDavid A. Johnson is founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company. As an investor entrepreneur, David invests in stocks, bonds, options, ETFs, REITs, real estate, closed end funds and alternative investment funds such as hedge funds an ...

Ares Investor Presentation For Quarter Ended June 30th, 2024 1 Disclaimer The information contained in this presentation is summary information that is intended to be considered in the context of Ares Management Corporation (NYSE: ARES) ("Ares") SEC filings and other public announcements that Ares may make, by press release or otherwise, from time to time. These materials contain information about Ares, its affiliated funds and certain of their respective personnel and affiliates, information about their re ...

Core Insights - Albert Anthony is a Croatian-American business author and media contributor with a focus on financial markets, launching a book titled "Financial Markets: The Next Generation" in 2025 [1] - He has a non-traditional financial background, having worked as an analyst in the IT sector for Fortune 500 companies, which has informed his approach to equities research [1] - In 2021, he founded his own equities research firm, Albert Anthony & Company, which operates remotely [1] Company Background - Albert Anthony & Company was established in 2021 and is managed entirely remotely, reflecting a modern approach to business operations [1] - The firm provides general market commentary and research based on publicly available data and personal analysis, without offering personalized financial advisory services [1] Professional Experience - Albert Anthony has participated in numerous business and innovation conferences in Croatia, contributing to his understanding of the fast-growing southern European economy [1] - He has completed degrees and ongoing training from institutions such as Drew University and the Corporate Finance Institute, enhancing his expertise in financial markets [1] Media Presence - In addition to writing for platforms like Seeking Alpha and Investing.com, Albert Anthony is launching a YouTube show titled "Financial Markets with Albert Anthony" in 2025, where he will provide market commentary [1] - He has also been involved in European casting agencies, appearing in over five productions, showcasing a diverse skill set beyond finance [1]

Core Viewpoint - Momentum Financial Services Group has successfully renewed and expanded its secured loan facility with Ares Management Alternative Credit funds, increasing the commitment from C$575 million to C$657.9 million, which will support its growth and liquidity needs [2][3][4]. Group 1: Company Overview - Momentum Financial Services Group is a leading provider of accessible financial solutions, operating over 360 stores in Canada and 60 in the United States under the Money Mart® and The Check Cashing Store® brands [5]. - The company specializes in flexible omni-channel solutions, including personal loans, cheque cashing, money transfers, and currency exchange [5][6]. Group 2: Financial Strategy - The expanded credit facility will provide additional capital to fund Momentum's growing loan receivables portfolio and meet the financial needs of its North American customers [3][4]. - The additional funds will be utilized to repay the existing 2023 secured loan facility and support further expansion in eligible loan receivables [3]. Group 3: Leadership and Partnerships - CEO Peter Kalen emphasized that the partnership with Ares Management is crucial for future growth and meeting rising demand for financial solutions [4]. - Ares Management Corporation, as a scaled capital provider, aims to support the continued growth of Momentum and its consumer loan portfolio [4][7].

Summary of Ares Management Conference Call Company Overview - **Company**: Ares Management - **Assets Under Management**: Approximately $550 billion, making it one of the largest alternative asset managers globally [2] Macro Economic Insights - **Global Economy**: The portfolio has held up well despite macroeconomic volatility, with no significant red flags observed in portfolio companies [4][5] - **Portfolio Performance**: - Low loan-to-value (LTV) ratios around 40% indicate strong equity positions from sponsors [6] - Interest coverage improved from 1.6 times to 2 times, with EBITDA growth in the low double digits, specifically 11% in Q1 [6][7] - **Impact of Tariffs**: Minimal impact from tariffs on portfolio performance, with only a single-digit percentage effect noted [7] Market Activity and Outlook - **Transaction Activity**: Anticipation of increased transaction activity as private equity firms look to monetize aged assets, with a significant amount of dry powder available [9][10] - **Pipeline Dynamics**: Activity that was expected in Q2 may shift to Q3 and Q4 due to a temporary pause in transactions [11] - **Deployment Opportunities**: - Over $140 billion of dry powder available for deployment, with a focus on secondaries, asset-backed financing, and real estate [12][14][15] - Year-over-year increase of 160% in secondaries deployment [14] Competitive Landscape - **Private Credit Growth**: The private credit market is experiencing significant growth, attracting new entrants and increasing competition [23] - **Market Dynamics**: The influx of retail dollars has led to compressed spreads in larger check sizes, prompting a strategic pivot to core and lower middle markets [25][27] Future Growth Areas - **Direct Lending**: Expected growth rate of 15% to 20% over the next five years, supported by strong demand and dry powder [34][35] - **Asset-Backed Finance (ABF)**: Significant growth potential in both liquid rated and illiquid non-rated segments, with a focus on insurance partnerships [36][37] - **Real Estate Debt**: Anticipated growth due to maturing bank debt, providing opportunities for Ares to partner with banks [40][41] Private Wealth Management - **Market Strategy**: Ares aims to grow its private wealth management segment, targeting $100 billion in AUM by 2028 [49] - **Product Development**: Introduction of new products, including a sports media entertainment fund, to attract retail investors [45][46] Financial Performance and Projections - **Fee-Related Earnings**: Targeting a growth rate of 16% to 20% over the next five years, driven by various business segments [55] - **Retail Flows**: Strong retail inflows in Q1, with expectations for continued strength in Q2 despite slight fluctuations [54] Technological Advancements - **AI Integration**: Ares is leveraging AI to enhance portfolio management and operational efficiency, with ongoing projects to identify use cases and improve decision-making processes [67][68][71] Conclusion - Ares Management is well-positioned for growth in the alternative asset management space, with a strong portfolio, significant dry powder for deployment, and strategic focus on emerging market opportunities and technological advancements.

Financial Data and Key Metrics Changes - The company reported strong portfolio performance with positive NOI and EBITDA growth, indicating resilience in its financials [3][4] - The alternative credit business is valued at $40 billion, reflecting a robust position in the market [3] Business Line Data and Key Metrics Changes - Direct lending portfolios maintain a loan-to-value ratio of 42%, suggesting a strong backing by institutional equity [7][30] - The company has seen a 61% increase in deployment despite a 7% decline in US M&A volumes, showcasing effective management of capital [25][26] Market Data and Key Metrics Changes - Credit spreads have widened by 50 to 75 basis points post-Liberation Day, but the total return in direct lending remains attractive at around 10% [18][21] - The secondary market for private equity is experiencing significant growth, with an estimated $160 billion in secondary deployment last year, indicating a healthy demand for liquidity solutions [62] Company Strategy and Development Direction - The acquisition of GCP enhances the company's position in industrial real estate and digital infrastructure, aligning with its strategic roadmap for growth in Asia and data centers [57][58] - The company aims to double its asset-based finance business to $75-80 billion, focusing on sub-investment grade and investment grade opportunities [36][38] Management's Comments on Operating Environment and Future Outlook - Management expresses cautious optimism about the economy, noting strong fundamentals despite concerns over inflation and economic growth [4][5] - The company maintains its five-year fee-related earnings growth guidance of 16% to 20%, reflecting confidence in its business model and market position [85][86] Other Important Information - The company emphasizes the importance of maintaining a balance between retail and institutional fundraising to ensure sustainable growth and performance [78][79] - Management highlights the educational efforts made to improve investor understanding of asset-based finance, which is crucial for market expansion [42][44] Q&A Session Summary Question: What are the biggest risks to the private credit market? - Management believes that private credit is one of the last places to see losses due to the high quality of borrowers and the structure of the market [8][9] Question: How is the integration of the GCP acquisition progressing? - The acquisition is on track to enhance the company's capabilities in industrial real estate and data centers, with significant growth potential identified [57][58] Question: How does the company manage the conflict between retail and institutional flows? - The company focuses on building investment capacity to ensure that it can meet the demands of both retail and institutional investors without compromising performance [78][79]

Group 1 - The stock of Ares Management Corporation (ARES) is experiencing significant attention due to high implied volatility in the options market, particularly the June 20, 2025 $220 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Ares Management's stock price, potentially due to an upcoming event [2] - Ares Management currently holds a Zacks Rank 3 (Hold) in the Financial - Investment Management industry, which is in the bottom 11% of the Zacks Industry Rank, with recent earnings estimates decreasing from $1.24 to $1.15 per share [3] Group 2 - The high implied volatility surrounding Ares Management may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Financial Performance - Total revenues for Q1 2025 reached $1,088,805, an increase of 53.8% compared to $707,363 in Q1 2024[25]. - Management fees increased to $816,987 in Q1 2025, up from $687,692 in Q1 2024, reflecting a growth of 18.8%[25]. - Net income attributable to Ares Management Corporation was $21,857 for Q1 2025, a decrease of 70% from $73,027 in Q1 2024[25]. - Comprehensive income attributable to Ares Management Corporation was $89,271 for Q1 2025, compared to $68,177 in Q1 2024, indicating a growth of 30.9%[28]. - Total consolidated expenses rose to $1,014,328, compared to $538,493 in the prior year, an increase of 88.5%[164]. - Income before taxes for Q1 2025 was $141,038, a decrease of 39% from $231,048 in Q1 2024[168]. - The company reported net realized and unrealized gains on investments of $268 for Q1 2025, down from $10,516 in Q1 2024[25]. Assets and Liabilities - Total assets as of March 31, 2025, were $27,181,768, an increase of 9.2% from $24,884,308 as of December 31, 2024[23]. - Total liabilities increased to $18,389,821 as of March 31, 2025, compared to $17,485,922 as of December 31, 2024, reflecting a rise of 5.2%[23]. - Total stockholders' equity increased to $4,454,107 as of March 31, 2025, compared to $3,543,646 as of December 31, 2024, reflecting a growth of 25.7%[23]. - The company reported cash flows used in investing activities of $1,744,690,000 for the three months ended March 31, 2025, compared to $34,071,000 in 2024[36]. - The company’s total investments reached $4.9 billion as of March 31, 2025, up from $4.6 billion at the end of 2024[63]. Growth and Expansion - The company reported a significant increase in assets under management (AUM), reaching $X billion, representing a Y% growth compared to the previous quarter[12]. - Fee paying AUM (FPAUM) increased to $X billion, reflecting a Z% rise, indicating strong demand for the company's investment products[17]. - The company anticipates a growth in fee related earnings (FRE) by X% in the upcoming quarter, driven by increased management fees and performance revenues[17]. - New product offerings in the wealth management sector are expected to contribute an additional $X million in revenue over the next fiscal year[14]. - The company plans to expand its market presence in Europe, targeting a growth of X% in AUM from this region by the end of the next fiscal year[14]. - A strategic acquisition is in progress, which is projected to enhance the company's operational capabilities and add approximately $X billion in AUM[14]. Compensation and Expenses - Performance-related compensation increased to $122,633 in Q1 2025, compared to a negative $50,532 in Q1 2024[25]. - Compensation and benefits expenses totaled $260,714, up from $205,858, indicating a rise of 26.6%[164]. - Total equity-based compensation expense for the three months ended March 31, 2025, was $257.862 million, significantly higher than $92.422 million in 2024[134]. - The company expects to recognize approximately $411.5 million in total compensation expense related to unvested equity awards over the remaining weighted average period of 3.6 years[57]. Investments and Market Strategy - The Credit Group manages credit strategies across various sectors, including liquid credit and direct lending, indicating a diversified approach to credit management[151]. - The Real Assets Group focuses on equity and debt strategies in real estate and infrastructure investments, highlighting the company's commitment to tangible asset classes[151]. - The Private Equity Group categorizes its strategies into corporate private equity and APAC private equity, suggesting a targeted investment approach in different geographical markets[152]. - The Secondaries Group invests in secondary markets across alternative asset classes, including private equity and credit, which may enhance liquidity and investment opportunities[152]. Cash Flow and Capital Management - Net cash provided by operating activities for the three months ended March 31, 2025, was $1,994,203,000, significantly higher than $710,045,000 in 2024[36]. - The company reported cash and cash equivalents decreased to $618,536 as of March 31, 2025, from $1,507,976 as of December 31, 2024[23]. - The company issued $1,657,881,000 in equity related to acquisition activities during the three months ended March 31, 2025[36]. - The company had aggregate unfunded commitments of $1,554.3 million as of March 31, 2025, compared to $1,451.4 million as of December 31, 2024, reflecting a 7.1% increase[104]. Acquisitions - The acquisition of GCP International was completed on March 1, 2025, with a total consideration of $3.9 billion, including $1.8 billion in cash and $1.7 billion in equity[50][51]. - GCP International contributed revenues of $38.8 million and net income of $7.6 million for the period from March 1, 2025, to March 31, 2025[59]. - The Company incurred $69.2 million in acquisition-related costs, with $33.7 million expensed during the three months ended March 31, 2025[58]. Tax and Deferred Assets - The income tax expense for the three months ended March 31, 2025, was $17.537 million, compared to $27.233 million for the same period in 2024[10]. - The net deferred tax asset increased from $241.9 million as of December 31, 2024, to $281.7 million as of March 31, 2025[127].

Financial Performance - GAAP net income was $9 million, or $0.17 per diluted common share[12] - Distributable Earnings were $7 million, or $0.13 per diluted common share[12] - The company reported a stable book value of $542 million, or $9.88 per common share (or $12.43 excluding CECL reserve)[12] - A cash dividend of $0.15 per common share was declared for 2Q 2025, equating to an annualized implied dividend yield of 14.5%[12] Balance Sheet and Capital Management - Total borrowings were reduced by $228 million to $946 million[12] - The net debt to equity ratio excluding CECL reserve decreased to 1.2x at 1Q 2025 from 1.6x at 4Q 2024[12] - Available capital as of May 2, 2025, was $147 million, including cash of $113 million[12] Portfolio and Asset Quality - $307 million of repayments were collected, including nine full loan repayments[12] - Office loans were reduced by $55 million to $585 million at 1Q 2025 from $640 million at 4Q 2024[12] - The CECL reserve is $140 million, representing 10% of the outstanding principal balance for loans held for investment[12] - 93% of CECL reserves relate to risk rated 4 and 5 loans[42]

Financial Data and Key Metrics Changes - Ares Management reported a year-over-year growth in management fees of 18%, with fee-related earnings (FRE) increasing by 22% and after-tax realized income per share of Class A common stock growing by 36% [5][24]. - The company declared a quarterly dividend of $1.12 per share, representing a 20% increase over the same quarter last year [3][4]. - Total assets under management (AUM) reached $546 billion, marking a significant milestone as the company crossed over $5 trillion in total AUM for the first time [6][24]. Business Line Data and Key Metrics Changes - Fundraising activities were robust, with over $20 billion in gross new capital commitments, the highest level for first-quarter fundraising on record [6][14]. - Deployment activities also saw strong performance, with over $31 billion deployed in the quarter and a gross to net deployment ratio of 49% in private credit strategies [6][9]. - The company experienced significant inflows across various strategies, with over 45% of quarterly fundraising coming from outside the credit group, including real estate, infrastructure debt, and private equity [14][15]. Market Data and Key Metrics Changes - The market environment has been characterized by increased volatility and uncertainty, particularly following geopolitical events and tariff announcements [7][20]. - Despite these challenges, Ares has maintained a record amount of dry powder, with $142 billion of available capital, which positions the company well to capitalize on market opportunities [9][36]. - The company noted that over 72% of total AUM is in credit-related products, with more than 92% of these being senior loans, indicating a defensive positioning in the current economic climate [12][20]. Company Strategy and Development Direction - Ares Management aims to leverage its flexible private market strategies to gain market share during periods of volatility, emphasizing its asset-light business model and focus on third-party client interests [10][36]. - The integration with GCP International is progressing well, with expectations of realizing significant synergies and enhancing vertically integrated capabilities in real estate [23][24]. - The company is optimistic about growth opportunities in real estate, particularly in response to anticipated increases in construction costs due to tariffs, which may constrain supply [14][20]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic uncertainty, citing a strong investment pipeline and the ability to invest opportunistically across various strategies [20][36]. - The company remains optimistic about 2025 and beyond, highlighting its resilience during challenging market conditions and the strength of its diversified investment strategies [36][37]. - Management noted that while M&A activity may slow, there are still significant opportunities in direct lending and credit markets, with expectations of continued strong performance in these areas [20][66]. Other Important Information - The company reported a significant increase in fee-related performance revenues, totaling $28 million, up from $4 million in Q1 2024, driven by strong fund performance [26][27]. - Ares Management's corporate loan portfolios are performing well, with strong credit quality and low loan-to-value ratios, indicating a solid foundation for future growth [32][40]. - The company is actively engaged with new partners in the reinsurance sector, expanding its reach in both the U.S. and APAC regions [23][24]. Q&A Session Summary Question: What do you expect for the remainder of 2025 regarding private credit quality? - Management highlighted that 96% of their Global Credit exposure is in senior loans, with low loan-to-value ratios, indicating a strong position against defaults and non-accruals [40][42]. Question: Can you discuss the momentum in wealth management and product growth? - Management noted record capital gathering in wealth management, with a broadening distribution network and new product offerings, maintaining strong inflows despite market turbulence [50][52]. Question: What is the outlook for FRE margin expansion? - Management remains optimistic about achieving zero to 150 basis points of margin expansion, citing ongoing integration efforts and synergies from GCP [56][59]. Question: How does the M&A backdrop affect deployment strategies? - Management indicated that even with subdued M&A activity, they have demonstrated the ability to invest across various strategies, particularly in opportunistic credit and secondaries [62][66]. Question: What is the opportunity set in Europe for private credit? - Management observed increased investor appetite for European products, with a modest acceleration in deployment and a favorable competitive position in the market [78][80].