Ares (ARES)

We believe private credit is in the early innings of a structural shift, taking share from the troubled regional banks and positioned for a substantial increase in investor allocation. Hence, there are excess returns available (e.g. FT Article today) and one would assume the ability to raise even more AUM.

• With history of attractive returns in Private Credit, alternative asset managers like ARES have proven they are excellent businesses.

• ARES is best placed to exploit the AUM growth opportunity. The bet is AUM growth beating expectations, it strikes us that this is the perfect environment for this to happen.

• EPS growth of 20%-30% for the next few years, 3% dividend

• Upside is based on 20x EPS in 2025.

Potential Upside: $165 (+70%) over 2 years, plus >3% dividend

Sensible Downside: $70-$75 (-29%)

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