Ares Management: A Closer Look at the Oversold Thesis (NYSE:ARES)

The analyst who published a bullish take on Ares Management (NYES:ARES) sees the stock as oversold, declaring a long position. The call comes as the asset manager, along with peers Brookfield Asset Management, Blue Owl Capital, and Blackstone, has drawn interest from value-oriented investors.

The question is whether the pullback is a buying opportunity or a value trap in a sector still digesting higher rates and shifting fund flows.

Ares, which focuses on credit and direct lending, has seen its stock slip from highs earlier this year. The analyst's thesis rests on the firm's ability to generate consistent fee-related earnings and its exposure to private credit, a corner of the market that has grown rapidly even as public markets have been choppy. The alternative asset managers have been among the beneficiaries of a trend toward private markets, where Ares has a strong franchise.

Blue Owl Capital (OWL) is also in the analyst's disclosed long portfolio, though the AlphaScore is currently unavailable. Both stocks face the same macro headwind: higher-for-longer interest rates that can slow dealmaking and put pressure on portfolio companies. Still, Ares’s track record of raising capital and investing across credit cycles gives it a cushion that some of its smaller rivals lack.

Critics will note that the stock is not cheap on a price-to-book basis relative to historical ranges, and that the bull case depends on the resilience of the credit cycle. A downturn in corporate defaults could hit Ares’s performance fees and create a mark-to-market hit on its balance sheet assets. The analyst’s response is that the current forward multiple already discounts a softer environment and that the firm's scale and diversification will protect earnings.

For someone building a position, the key is the catalyst that would close the gap between current price and intrinsic value. That catalyst could be a softening of rate expectations or a new round of fund closes that resets the growth narrative. Without it, the stock may stay cheap for a while.