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This Top Insider Just Increased His Appetite for Ares Capital Stock
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This Top Insider Just Increased His Appetite for Ares Capital Stock

Story Highlights

Insiders buying shares of the company is often seen as a positive factor. Let’s check why Ares Capital’s top executive made one such move.

Ares Capital (ARCC) disclosed that its Co-President, Michael Lewis Smith, has increased his stake in the company. The closed-end, non-diversified management investment company generates both current income and capital appreciation through debt and equity investments.

On May 24, Smith made an informative buy of 54,000 shares for $18.64 a share, taking the total transaction value to $1 million. Post his move, Smith’s total holding of the company’s shares now stands at $4.34 million.

Based on informative transactions by two insiders over the past three months, TipRanks’ Insider Trading Activity tool shows that the confidence in Ares Capital is currently Positive. Further, corporate insiders have bought shares worth $1.1 million over this period.

Near-Term Prospects

Last month, Ares Capital reported first-quarter 2022 results. Investment income climbed 12.8% year-over-year to $440 million. Core earnings stood at $0.42 per share, down 1 cent from the same quarter last year.

As of March 31, 2022, the fair value of the company’s portfolio investments was $19.5 million, down 2.6% sequentially.

The company’s performance is likely to be impacted in the near term as high inflation and volatility in the markets are expected to widen its credit spreads.

Nevertheless, the acquisition of the $2.4 billion direct lending portfolio of Analog Capital Management is expected to boost its portfolio company, Ivy Hill, and generate higher revenues.

Stock Rating

Last month, Truist Financial analyst Michael Ramirez lowered the price target on Ares Capital to $22 from $23 while maintaining a Buy rating. The price target implies 20.2% upside potential from current levels.

Overall, the stock has a Strong Buy consensus rating based on six unanimous Buys. ARCC’s average price forecast stands at $22.33, implying upside potential of 22%.

Smart Score 

Ares Capital scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. 

Conclusion

The Co-President’s move to increase his stake signals his confidence in the company’s growth plans.

Insider trading activity makes it possible to quickly find and track insiders’ moves, which are well represented through the TipRanks Insiders’ Hot Stocks tool.

Discover new investment ideas with data you can trust.

Read full Disclaimer & Disclosure

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