ARES Ares Management
Premium alt-manager earning excess returns on thin book; secular tailwind justifies rich multiple.
The story
Ares is a premier alternative asset manager benefiting from secular AUM growth into private credit and real assets. Trailing ROE of 22.6% reflects elevated performance and management fees that should mean-revert as fee margins compress toward industry norms. Book equity is thin relative to AUM, so modest book growth compounds the franchise value.
Normalized ROE of 18% sits below the trailing 22.6% peak but above cost of equity (~10.1%), reflecting durable fee streams and performance upside without extrapolating cycle-high carry. Book growth decelerates from 8% to 4.5% as AUM scaling slows and buybacks balance equity accumulation.
Value drivers
| Return on equity (normalized) | 18.0% |
| Book-value growth (Y1) | 8.0% |
| Terminal book growth | 4.5% |
| Beta | 1.15 |
| Failure probability | 2.0% |
| Cost of equity | 10.1% |
Valuation bridge
| PV of excess returns | 1.15B |
| PV of terminal excess | 700.39M |
| Equity value | 4.58B |
| ÷ shares → per share | $20.12 |
News
bullish +0.30 · 8 articles
- Ares Management Up 28.8% in 6 Months: How to Approach the Stock Now
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- Does Ares Management (ARES) See $435 Million Student Housing Deal As A Growth Lever?
- Billionaire Daniel Loeb Is Betting on These 2 Non-AI Stocks
- SoFi, WisdomTree, Ridgepost Capital, Ares, and S&P Global Shares Are Soaring, What You Need To Know
- Is Ares' ¥612 Billion Japan Logistics Fund Altering The Investment Case For Ares Management (ARES)?
- Private Equity Wants Your Broken Garage Door. Why KKR Thinks They Are Worth $2 Billion
- Investors Still Want Out of Private Credit Funds Like Blackstone’s and Cliffwater’s
Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 2.82B | 18.0% | 221.88M | 201.50M |
| 2 | 3.04B | 17.3% | 219.77M | 181.23M |
| 3 | 3.27B | 16.7% | 215.11M | 161.09M |
| 4 | 3.51B | 16.0% | 207.72M | 141.26M |
| 5 | 3.75B | 15.4% | 197.42M | 121.92M |
| 6 | 3.99B | 14.7% | 184.08M | 103.23M |
| 7 | 4.23B | 14.1% | 167.57M | 85.34M |
| 8 | 4.47B | 13.4% | 147.85M | 68.38M |
| 9 | 4.71B | 12.8% | 124.90M | 52.46M |
| 10 | 4.94B | 12.1% | 98.74M | 37.66M |
Key risks
- Performance fee volatility and carry dry-ups in credit downturns
- Fee compression as private credit becomes commoditized
- Key-person risk and AUM outflows in stress scenarios
Catalysts
- Continued private credit AUM migration from banks boosting fee-related earnings
- Realization of unrealized performance income boosting book equity
- Strategic acquisitions expanding product breadth and distribution
⚠ Extreme gap to market price — large, well-covered names are rarely mispriced this much; likely embeds risk the model underweights. A flag, not a verdict.