Ares Management closed the year with Q4 results that missed Wall Street’s expectations, prompting a significant negative market reaction. Management pointed to resilient credit quality and a rebound in transaction activity, as private equity firms accelerated deal-making late in the year. CEO Greg Mason highlighted that “the weighted average organic EBITDA growth rate of our borrowers was more than three times that of GDP” and emphasized the company’s ability to support its dividend through stable core earnings and a diversified portfolio. Nonetheless, the quarter’s underperformance was attributed to lower base rates and lingering caution in the M&A environment, with management openly acknowledging these headwinds.

Is now the time to buy ARES? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Ares’s Q4 Earnings Call

• John Hecht (Jefferies) asked about AI-related risks in the software portfolio. CEO Greg Mason emphasized their focus on core infrastructure software with data moats and minimal near-term AI disruption risk, adding, “We see minimal near-term risk to our software portfolio.”
• Doug Harter (UBS) questioned how Ares could capitalize on market weakness. Mason responded that Ares’ diversified capital base allows it to play offense during dislocations, particularly as some competitors face retail capital outflows.
• Finian O’Shea (Wells Fargo) challenged Ares on potential threats to foundational enterprise software from AI. Mason explained that the greatest risk lies in single-function or content-focused software, which represents only a small portion of their book.
• Casey Alexander (Compass Point) inquired about the company’s willingness to use its share repurchase program if shares trade below NAV. Mason confirmed repurchases remain on the table and are regularly discussed with the board.
• Arren Cyganovich (Truist) asked about differences between Ares’ software portfolio and public software companies. Mason clarified that as lenders, Ares prioritizes cash flow and EBITDA, not just growth, and has been conservative with recurring-revenue loans.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the pace and quality of new originations, particularly in specialized sectors like software and healthcare; (2) the impact of interest rate movements and competitive shifts on lending margins and deal terms; and (3) credit performance and early warning signs within the core portfolio, especially as macro conditions evolve. The company’s ability to sustain disciplined underwriting and capitalize on market dislocations will also be a key signpost.

Ares currently trades at $137.40, in line with $137.22 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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