Ares Management Corp wrote the following in its First Quarter 2026 Earnings Press Release:
'GAAP net income attributable to Ares Management Corporation was $142.6 million for the quarter ended March 31, 2026. On a basic and diluted basis, net income attributable to Ares Management Corporation per share of Class A and non-voting common stock was $0.46 for the quarter ended March 31, 2026.
After-tax realized income was $452.4 million for the quarter ended March 31, 2026. After-tax realized income per share of Class A common stock was $1.24 for the quarter ended March 31, 2026. Fee related earnings were $464.4 million for the quarter ended March 31, 2026.'
Ares Management's stock price is down circa 40 % from its recent peak driven by the turmoil in the private credit business, namely the bankruptcies of Tricolor, First Brands Group and Market Financial Solutions.
Since private credit usually gives out credits with between 7 % and 15 %, even 20 % interest rates many a times to finance mid cap technology firms private equity buyouts, bankruptcies as Tricolor, First Brands Group and Market Financial Solutions are to be expected. This can not be called normal line of business, but given the inherent leveraged nature of private credit, especially when the private credit loans written are used to finance private equity buyouts, there are bound to be bankruptcies.
Circa 30 % or even more according to some analysts of the private credit loans are disbursed to technology, even artificial intelligence, AI related firms. Some of them loosely related as healthcare AI and energy related AI infrastructure.
If the AI boom does not turn into a bust defined by the Nasdaq Composite falling more than 62 % of its recent peak, private credit loans flows and private credit giants as Ares, Carlyle, Apollo, Blue Owl etc.'s stock prices should start to recover.
A key risk to the AI trade are the coming high profile IPOs of ChatGPT, Anthropic and the combined SpaceX and xAI entity. It they are successful, there is the risk they will sap large scale capital from other AI technology firms. Both that or if the coming AI IPOs flop, could cause a large correction in the Nasdaq Composite and by extension the S&p 500, Dow Jones Industrial Average and most probably global stock markets.
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