It’s been nearly four months since I last checked on Ares Management (ARES), and since then, the shares haven’t really budged at all. Since June 8th, the shares have returned about 2%, when dividends are factored in. While this performance may not be inspiring for some, I don’t believe it tells the full story.

As seen below, Ares Management is a relatively low-beta stock, which means that its stock price has swung relatively little compared to the rest of the market. For this reason, I believe Ares is a relatively good place for investors who are seeking a place to park cash, while remaining in equity market. In addition, I see upside potential from where the stock trades today; so let’s get started.

(Source: YCharts)

A Look Into Ares Management

Ares Management is a leading investment manager that has shown resiliency and an ability to thrive during recessions and the current pandemic-induced downturn. It was founded in 1997 that operates in the three segments of Credit, Private Equity, and Real Estate.

Ares currently has $106 billion in total FPAUM (fee-paying AUM), with about 75% of assets in credit-related investments, 16% in private equity assets, and the remaining 9% in Real Estate. It has a stable and high-quality investor base that includes pension funds, insurance companies, banks, sovereign wealth funds, and university endowments.

What I find impressive is that the Ares continued to grow FPAUM both sequentially and YoY, by 3.4% and 18%, respectively, in the latest quarter. This translated into a 26% YoY growth in FRE (fee-related earnings), as many of Ares’ funds are mature, and therefore have lower administrative and setup costs than newer funds. This translates into higher profitability, which is why FRE grew faster than FPAUM.

(Source: Company Earnings Presentation)

Overall, I see Ares as

Sergiño Dest, right, a member of the U.S. national team, was acquired by Barcelona from Dutch club Ajax. <span class="copyright">(Sam Greenwood / Getty Images)</span>
Sergiño Dest, right, a member of the U.S. national team, was acquired by Barcelona from Dutch club Ajax. (Sam Greenwood / Getty Images)

On Thursday, Barcelona acquired U.S. national team defender Sergiño Dest from Dutch club Ajax, a transfer that could cost the Spanish giant more than $30 million in transfer fees. On Sunday the team could get its first look at its newest player when it hosts Sevilla (BeIN Sports, noon PDT), highlighting the televised soccer action from Europe.

EPL: Three games into the Premier League season, only four teams remain unbeaten. Everton is one of them and Manchester City is not. The Toffees (3-0-0) also have the league’s top scorer in Dominic Calvert-Lewin, who has five goals heading into its game with visiting Brighton (1-2-0) on Saturday (NBCSN, Universo, 7 a.m. PDT). Later Saturday, Manchester City (1-1-0), which lost a mistake-filled game to unbeaten Leicester City last week, will try to rebound when it meets newly promoted Leeds United (2-1-0) at Elland Road (Ch. 4, Universo, 9:30 a.m. PDT). Two other unbeatens — Liverpool and Aston Villa — face off Sunday when the Reds (3-0-0) travel to Villa Park to meet the only EPL team yet to concede a goal (NBCSN, Universo,11:15 p.m. PDT).

Ligue 1: With two losses in five games, perennial French champion Paris-Saint Germain (3-2-0) will match its total for defeats from last season if its falls to Angers (3-2-0) on Friday (BeIN Sports, noon PDT) at Parc des Princes. PSG, which saw several star players sidelined by COVID-19 last month, lost its first two games but has won the last three by a combined 6-0. Angers has allowed six goals in its last two outings.

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