ARES Ares Management Corporation : Bullish and Bearish Analyst Opinions

Speaker explicitly stated a preference to "lean" into StepStone and Ares due to their "faster growth" and "growth and value driven" models. These alternative asset managers have less reliance on the challenged wealth channel for private credit and are better positioned in institutional or other faster-growing market segments. Long due to superior growth prospects and business model differentiation within the asset manager space. A broader downturn in private market activity or spread widening that impacts all asset managers uniformly.

Whalen describes private credit as a "slow-motion trainwreck" with redemptions, reputation damage, and a potential "Lehman moment" for firms like Apollo, Ares, and Blue Owl. These firms face liquidity issues due to illiquid strategies, public scrutiny, and reliance on bank credit lines; Washington regulators are ignoring the problem, exacerbating risks. Avoid due to high redemption pressures, liquidity risks, and regulatory neglect, which could lead to defaults or severe losses. If regulators intervene or market conditions stabilize, the situation might improve.

Leyla states she is "watching the equity of the asset managers" like Blackstone, Ares, and Apollo, noting that sentiment is very negative and fee revenue is likely to decline as assets under management in their semi-liquid funds shrink due to outflows. These alternative asset managers' revenues are tied to fees from capital managed. The current redemption crisis in their semi-liquid private credit funds threatens to shrink that asset base. Extreme negative sentiment may have created a potential opportunity. WATCH because the negative catalyst (fee pressure) is clear and present, but extreme pessimism may have created a future entry point. It is not yet a buy signal. Outflows could be more severe and prolonged than expected, leading to greater fee erosion. The equity may not be cheap enough to compensate for the fundamental pressure.

The speaker explicitly states that firms like Blackstone, KKR, and Ares have grown from managing $40 million to nearly a trillion dollars, a result of structural change in the marketplace that is continuing. This structural change (growth in private markets, capital formation, consolidation) rewards good work with more work—specifically, managing more money. Size in private markets is not the enemy of performance but enhances it through greater resources and relevance. The firms at the center of this secular trend are positioned for continued disproportionate growth and success. A severe, prolonged market downturn that disrupts the ability to originate good investments and manage risk effectively.

Speaker discusses Apollo (APO), Blackstone (BX), and Ares (ARES) as potential bottom-fishing candidates in the beaten-down private capital space. Notes they were top gainers in the S&P on the day of recording. These stocks are down significantly (e.g., BX down ~40%) despite forward EPS estimates near all-time highs, creating a disconnect. The core business issue is an expected terrible fundraising environment in 2026, not necessarily widespread defaults in current holdings. The group is worth monitoring for a potential bounce if the private credit panic subsides and the feared systemic spillover does not materialize. Apollo is highlighted as potentially being more cautious and better positioned. The private credit/equity marks are indeed wrong, leading to significant NAV declines and sustained investor outflows, creating a vicious cycle.

"You see the big private credit sponsors. Their stock prices have declined significantly right look at companies like Aries and you also hear all sorts of headlines about investors in private credited funds trying to withdraw." AI is rapidly disrupting the middle-market software businesses that many private credit funds and Business Development Companies (BDCs) lend to. This fundamental deterioration is sparking investor panic and redemption requests, which will continue to pressure the equity valuations of publicly traded private credit sponsors. AVOID because even though the structure prevents a systemic bank run, the equity tranches of these BDCs will absorb the loan losses and suffer from negative sentiment. The disruption to software companies is overstated, and the high dividend yields of BDCs attract aggressive dip-buying from retail investors.

"Aries fell today by 4.8%. KKR fell by 3.2%. This as Jp morgan Chase is said to be restricting some lending to private credit funds." Major prime brokers restricting lending to private credit funds chokes off their leverage and liquidity, severely impacting the business models and return profiles of alternative asset managers. AVOID ARES, KKR, and OWL due to tightening credit conditions from major Wall Street banks. JPMorgan reverses its policy, or alternative asset managers successfully secure alternative sources of leverage.

Things like Owl and Ares and KKR and all these big private credit names really selling off... I'm looking at some of this selloff as being a little overdone. The market is mispricing private credit risk by incorrectly comparing it to the 2008 bank leverage cycle. Without a broad economic recession or surging corporate defaults, the massive 40-50% selloff in these alternative asset managers presents a deep-value entry point. Go long top-tier private credit and alternative asset managers that have been unfairly punished by macro fears. If the US economy enters a severe recession, corporate defaults will spike, leading to actual structural losses and liquidity gates in private credit funds.

The author identifies two dividend stocks, ARES and WES, as undervalued bargains.

"Private equity firms are stuck with assets that are now going on kind of seven years... Secondary funds have the ability to step in and really capitalize on this current dynamic." The "Liquidity Crunch" in private equity forces GPs and LPs to sell stakes at discounts. The largest players in the Secondaries market (Blackstone's Strategic Partners, Carlyle's AlpInvest, Ares' Landmark, KKR) are the buyers of choice. They get assets at a discount and are the solution to the industry's liquidity problem. Long the alternative asset managers with dominant Secondary platforms. A severe recession could mark down the underlying portfolio values (NAV) of the assets they are buying, regardless of the entry discount.

These stocks (KKR, Aries Management, CBRE, Huntington Bancshares) are explicitly on Garrett's "negative momentum" breakdown list. When stocks fall below key moving averages (20/50 day) and lack insider buying support, they enter a liquidation phase. The "Private Credit is Subprime" narrative, while debatable fundamentally, is driving price action downward in these names. Short/Avoid until momentum stabilizes or insiders step in. A sudden Fed pivot or "QE" announcement would squeeze financials higher immediately.

When asked about "headlines about another fund... struggling to meet redemptions," Waller responds: "I don't see big, really big widespread problems... couple of cases of certainly fraud... I don't think as a whole the private credit market is in any serious trouble." The market currently fears a systemic liquidity crisis in Private Credit (the "shadow banking bubble" narrative). Waller, a key regulator, explicitly isolates these issues as "fraud" rather than systemic failure. This greenlights the major, high-quality asset managers (Blackstone, KKR, Apollo) to continue gaining market share as fears of a regulatory crackdown or sector-wide collapse dissipate. LONG. The "Fed Put" effectively exists for the asset class structure, as they aren't seeing systemic risk. Discovery of contagion where major players actually have bad collateral, disproving Waller's "idiosyncratic" view.

A Blackstone private credit fund faced record redemption requests (7.9% of the fund), and Blue Owl had to block escape hatches on some funds. Retail investors are panicking that AI (Anthropic/OpenAI) will destroy the enterprise software companies that these private credit funds lend to. This fear is causing a liquidity crunch/redemption cycle. Avoid the sector. The upside is capped (it's debt), but the downside involves illiquidity and panic selling. If the Fed cuts rates or AI fears subside quickly, these yield-generating assets could rebound.

McVey argues we are in a "regime change" favoring real assets (infrastructure/real estate) and that Private Credit is undergoing massive consolidation ("went from 20 players to five"). He notes defaults will rise, making scale and recovery capabilities critical. In a consolidating market with rising defaults, the largest players with the best origination and workout teams win market share from smaller, weaker funds. Additionally, these firms are the primary aggregators of the "hard assets" (infrastructure) McVey recommends for an inflationary environment. Long the "Big 4" Alternative Asset Managers who benefit from the consolidation and demand for real assets. A severe global recession causing a liquidity crisis in private markets; regulatory crackdowns on non-bank lending.

"I think getting larger in private equity could make sense for us... it just hasn't kept pace with the rest of the business... someone of our size and global reach should be larger generally in private equities." Ares is signaling a specific catalyst: M&A-driven expansion. In a difficult fundraising environment, smaller high-quality managers are cheaper to acquire. By bolting these onto the Ares platform ("The Ares Flywheel"), they can scale AUM and fees significantly, bringing the PE division up to parity with their dominant Credit arm. Long ARES as they execute this growth strategy, capitalizing on industry consolidation. Integration risk of acquired firms or overpaying for boutique managers.

Whalen states that the world of private credit is "unraveling" because retail investors are fleeing these illiquid investments. He explicitly notes that companies like Blue Owl (OWL) "have been selling off dramatically" and that putting retail investors into these trades was "always wrong." Retail investors demand liquidity. When they realize they cannot exit private credit positions easily, they panic. This forces a migration out of private credit/equity vehicles. Even though firms like Apollo (APO) and Ares (ARES) have insurance arms for funding, the broader sentiment and retail exodus create significant headwinds for their stock prices. SHORT/AVOID these asset managers as the "liquidity premium" returns to the market. These firms collect management fees regardless of performance, which provides a floor to their revenue; institutional capital may step in where retail flees.

Private credit has expanded massively to fill the void left by banks, lending to risky LBOs (40% in software) at rates that imply "low single B" credit quality. Lenders are seeing a rise in "PIK interest" (borrowers not paying cash). The entire premise of this lending was based on software "recurring revenue" and high equity valuations acting as a cushion. With software equities collapsing and revenue quality questioned, the collateral backing these loans is vaporizing. In a recession, this credit tier historically sees ~30% default rates. Short the sector. While "gold standard" firms like ARES might have better underwriting, the asset class as a whole is opaque, illiquid, and facing a "race to the bottom" in lending standards. A "soft landing" where rates drop quickly, allowing borrowers to refinance before defaults cascade; the "gold standard" firms (ARES) proving resilient enough to gain market share from collapsing smaller players.

Frost states CalPERS has a target allocation of 8% for Private Credit but is currently "hovering around 4%." She affirms "a lot of conviction" in the asset class and a willingness to buy secondary stakes if terms are right. When a massive capital pool ($400B+) is 50% underweight in a specific asset class, it creates a multi-year structural tailwind. The "Big 4" alternative asset managers (Blackstone, KKR, Apollo, Ares) are the primary beneficiaries of these institutional flows, specifically in direct lending and specialty finance. LONG the asset managers collecting these fees. A severe recession causing a spike in default rates within private credit portfolios.

Schwartz states, "The demand for capital is going up in all forms... everyone is focused on economic growth and reindustrialisation investing in national security." He notes that governments are constrained by high deficit levels. When capital demand rises (re-industrialization) but traditional government funding is capped by deficits, the gap must be filled by Private Capital. This creates a structural tailwind for Alternative Asset Managers (Alts) to deploy capital and earn fees, regardless of short-term market sentiment. LONG Private Equity/Credit managers who facilitate this capital transfer. A severe recession curbing deal flow or a regulatory crackdown on private credit.

UBS warns "private credit default rates could surge 15%." The speaker notes "new limits for retail investors" regarding "Blue" (likely Blue Owl) and mentions critical views from Citron Research. Private Credit and BDCs (Business Development Companies) have thrived in a low-default, low-rate volatility environment. If defaults hit 15% and retail liquidity is gated (limits on withdrawals), valuations will compress, and fee income for the major asset managers (Blue Owl, Blackstone, Ares) will be challenged. SHORT / AVOID exposure to private credit managers and BDCs until default rates stabilize. Private credit structures (bilateral negotiation) may allow managers to "extend and pretend," masking true default rates and keeping NAVs artificially stable.

Alternative asset managers are in 30-40% drawdowns (e.g., Blackstone down 42% from highs). Sentiment is at rock bottom due to fears over private credit valuations and "hidden cockroaches." Michael argues these are "illustrious" firms with massive staying power (Blackstone is the "BlackRock of Private Equity"). The market is pricing in a 2008-style collapse, but actual distress is not yet visible in the data. He views this as a sentiment disconnect. Long the top-tier Alternative Managers as a contrarian value play. (Michael explicitly bought BX and owns CG). Actual systemic credit events or fraud (like the "cockroaches" Jamie Dimon warned about) could validate the sell-off.

Blue Owl (OWL) has restricted withdrawals (gating) on some funds and is trading at a massive discount to Net Asset Value. Private credit firms have significant exposure to software companies (approx. 20% of loans). If AI hurts software cash flows, these loans become toxic. OWL is the "canary in the coal mine" for the broader private credit/equity space. SHORT / AVOID. Kramer explicitly states, "I am a seller, not a buyer of fraught situations." The redemption issues at Blue Owl prove idiosyncratic rather than systemic to the sector.

"It feeds into Blackstone and KKR and Ares and then where's the exposure? ... Do we really know where the exposure is? ... whether it's the software stocks or what else is in these private portfolios." The market is de-rating alternative asset managers because investors fear "second derivative" damage—specifically that the crash in public software valuations implies massive, yet-unreported write-downs in private equity portfolios. WATCH / AVOID until there is clarity on the valuation of their private holdings. If these firms clarify that their exposure is minimal or hedged, the stocks could rebound sharply.

Whalen states "The Wharf Rats Are Coming Out." He notes Blue Owl (OWL) sold loans at 99.7% of value and restricted redemptions. He explicitly mentions Apollo (APO), Aries (ARES), KKR, and TPG "took lumps" and that the sector is facing liquidity problems. Whalen argues that private markets are inferior to public markets due to lack of price discovery and liquidity. He predicts a "ticking time bomb" where retail investors will lose money and regulators (insurance commissioners) will eventually have to crack down on the "fox in the hen house" dynamic where PE firms own insurers. SHORT or AVOID these asset managers as liquidity crunches and regulatory scrutiny increase. Regulators remain passive (as Whalen notes Paul Atkins/SEC are ignoring it); these firms successfully offload bad assets to annuity holders without consequence.

Blue Owl (OWL) restricted withdrawals from one of its private credit funds because redemption requests exceeded the quarterly limit (6% vs 5% limit). This creates a "sentiment overhang" for the entire Private Credit sector (Apollo, Blackstone, Ares). Investors fear a liquidity mismatch similar to the BREIT saga. However, the loans were sold "at par" to meet redemptions, indicating the *credit quality* is fine, it is purely a *liquidity structure* issue. WATCH. The knee-jerk reaction is to sell the asset managers, but if the underlying assets are performing (as Apollo claims), the dip may eventually be a buying opportunity once the liquidity panic subsides. If this triggers a broader "run on the bank" for private credit funds, fees and AUM will contract sharply across the sector.

Blue Owl Capital (OWL) restricted withdrawals from a retail-focused private credit fund after redemption requests exceeded the 5% quarterly limit. This event highlights the "illiquidity discount" reality for retail investors in private credit. It is likely to damage sentiment across the entire Alternative Asset Manager sector, specifically for firms aggressively selling illiquid products to retail channels (wealth management). SHORT OWL on the news; WATCH peers (BX, APO) for contagion selling or regulatory scrutiny. If this is contained to a single fund and Blue Owl manages the PR well, the dip could be a buying opportunity for the broader sector (as argued by Mark Rowan in a separate clip regarding the structural need for private finance).

Blue Owl Capital (OWL) restricted withdrawals from a non-traded private credit fund and sold 34% of the portfolio's loans to generate liquidity for redemptions. This event validates the "cockroach theory" in private credit—if one major player faces liquidity mismatches in retail vehicles, others likely face similar redemption pressures. The illiquidity of the underlying assets vs. the promised liquidity to retail investors is a structural risk. SHORT/AVOID. The sector is repricing risk; peers like Ares, Apollo, and Blackstone are trading down in sympathy. Blue Owl successfully stabilizes the fund, or the issue remains isolated to this specific vehicle.

Spevak confirms Equinox completed a $1.8 billion refinancing in 2024 involving "Sixth Street, Silver Lake, and Ares." This deal highlights Ares Management's (ARES) ability to deploy capital into high-profile, cash-generative private assets that traditional banks may have pulled back from. It validates the "Private Credit" boom where alternative asset managers capture yield from premium brands. Long ARES as a beneficiary of the private credit super-cycle and high-end corporate refinancing. Credit cycle downturn or defaults in their portfolio companies.

"There's institutional investor money out there... looking to invest in professional sports franchises... Private equity is increasingly buying more stakes because they are seeing these meteorite fees continue to rise." As valuations hit levels where individuals can no longer afford teams (e.g., $8B for Seahawks), the capital stack requires institutional money. Private Equity firms raising dedicated sports funds will see increased deal flow and management fees as they provide the necessary liquidity for these transactions. LONG. Betting on the "financialization of sports" trend. League ownership rules (like the NFL's strict limits) could cap PE involvement; valuations could peak, reducing IRR for these funds.

Harrison states the deal is driven by the need for "scale" and specifically to access Nuveen's "strength and depth of... Private Markets capabilities and Fixed Income distribution." Traditional "Active Management" (stock picking) is commoditized and capital-intensive due to tech costs. The "Alpha" and growth are entirely in Private Credit and Private Equity. If a giant like Schroders ($700B+ AUM) feels too small to compete without Private Markets exposure, the pure-play Alternative Asset Managers (Blackstone, KKR, Ares, Blue Owl) are the undisputed winners of this secular rotation. They are the predators; traditional managers are the prey. LONG the Alternative Asset Managers and Consolidators. Regulatory scrutiny on private credit valuations; slowing fundraising in private equity.