Sumitomo Mitsui Trust Group Inc. Boosts Stake in Ares Capital Corporation $ARCC

Key Points

• Sumitomo Mitsui Trust Group raised its stake in Ares Capital by 10.1% in Q4 to 1,671,274 shares (about 0.23% of the company), valued at roughly $33.81 million.
• Ares insiders showed confidence: CEO Michael Kort Schnabel bought 12,500 shares at ~$19.13 and CFO Scott C. Lem bought 5,186 shares at ~$19.29, increasing their holdings materially.
• The firm pays a sizable dividend—$0.48 quarterly (annualized $1.92) implying a 10.2% yield—but the payout ratio is elevated at 103.23%, signaling potential sustainability risk.

Sumitomo Mitsui Trust Group Inc. raised its position in Ares Capital Corporation (NASDAQ:ARCC - Free Report) by 10.1% in the fourth quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). The fund owned 1,671,274 shares of the investment management company's stock after buying an additional 153,714 shares during the period. Sumitomo Mitsui Trust Group Inc. owned approximately 0.23% of Ares Capital worth $33,810,000 at the end of the most recent quarter.

A number of other institutional investors and hedge funds also recently added to or reduced their stakes in ARCC. Marshall Wace LLP purchased a new position in Ares Capital in the 3rd quarter valued at about $36,943,000. UBS Group AG boosted its position in Ares Capital by 11.8% in the 3rd quarter. UBS Group AG now owns 7,900,015 shares of the investment management company's stock valued at $161,239,000 after buying an additional 836,826 shares during the last quarter. Bank of America Corp DE boosted its position in Ares Capital by 8.9% in the 2nd quarter. Bank of America Corp DE now owns 8,678,129 shares of the investment management company's stock valued at $190,572,000 after buying an additional 705,882 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC purchased a new position in Ares Capital in the 1st quarter valued at about $14,766,000. Finally, Qube Research & Technologies Ltd boosted its position in Ares Capital by 182.2% in the 3rd quarter. Qube Research & Technologies Ltd now owns 893,834 shares of the investment management company's stock valued at $18,243,000 after buying an additional 577,042 shares during the last quarter. 27.38% of the stock is owned by hedge funds and other institutional investors.

Key Stories Impacting Ares Capital

Here are the key news stories impacting Ares Capital this week:

• Positive Sentiment: Private‑credit markets are described as calm, which is supporting Ares’s earnings outlook and helped push shares of Ares and peers higher as investors gain confidence in asset valuations and fee income stability. Private Credit Looks Calm. Why Blackstone and Ares Stocks Are Starting to Climb.
• Positive Sentiment: Aggregate analyst coverage remains constructive — brokerages give ARCC a consensus “Moderate Buy,” which supports demand for the dividend REIT/credit manager. Ares Capital Corporation NASDAQ: ARCC Given Consensus Rating of "Moderate Buy" by Brokerages
• Neutral Sentiment: Mainstream dividend and income roundups are highlighting high‑yield names (the type of coverage that draws yield‑seeking flows into funds and names like ARCC), which can support longer‑term interest but is not an immediate catalyst. This $250,000 Income Portfolio Pays a $20,000 Annual Dividend
• Neutral Sentiment: Broader commentary advocating dividend stocks as retirement income keeps ARCC in investor consideration sets, but such thematic pieces are incremental rather than near‑term movers. Preparing For Retirement: Stop Trading, Buy Big Dividend Stocks Instead
• Negative Sentiment: Keefe, Bruyette & Woods trimmed its price target on ARCC from $22 to $21 while keeping an Outperform rating — a modest downward revision that can sap near‑term upside and weigh on sentiment. Keefe Bruyette & Woods Lowers ARCC Price Target

Insider Activity at Ares Capital

In other news, CEO Michael Kort Schnabel purchased 12,500 shares of the company's stock in a transaction on Thursday, February 5th. The shares were bought at an average price of $19.13 per share, for a total transaction of $239,125.00. Following the completion of the purchase, the chief executive officer owned 40,500 shares of the company's stock, valued at $774,765. This trade represents a 44.64% increase in their ownership of the stock. The purchase was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CFO Scott C. Lem purchased 5,186 shares of the company's stock in a transaction on Friday, February 6th. The stock was purchased at an average price of $19.29 per share, for a total transaction of $100,037.94. Following the purchase, the chief financial officer directly owned 39,463 shares of the company's stock, valued at $761,241.27. This trade represents a 15.13% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. 0.49% of the stock is currently owned by company insiders.

Analyst Upgrades and Downgrades

Several brokerages have recently commented on ARCC. Keefe, Bruyette & Woods reduced their price target on shares of Ares Capital from $22.00 to $21.00 and set an "outperform" rating on the stock in a research report on Thursday. UBS Group reduced their price target on shares of Ares Capital from $21.00 to $19.00 and set a "neutral" rating on the stock in a research report on Friday, March 13th. Royal Bank Of Canada reduced their price target on shares of Ares Capital from $23.00 to $22.00 and set an "outperform" rating on the stock in a research report on Monday, February 9th. Weiss Ratings reissued a "hold (c+)" rating on shares of Ares Capital in a report on Monday, December 29th. Finally, Wall Street Zen cut shares of Ares Capital from a "hold" rating to a "sell" rating in a report on Saturday, February 7th. Seven equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company's stock. Based on data from MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and a consensus target price of $21.25.

Ares Capital Stock Performance

Shares of NASDAQ ARCC opened at $18.78 on Friday. The company has a quick ratio of 1.70, a current ratio of 1.70 and a debt-to-equity ratio of 1.12. The firm's 50-day moving average price is $18.62 and its two-hundred day moving average price is $19.67. Ares Capital Corporation has a 52-week low of $17.40 and a 52-week high of $23.42. The stock has a market capitalization of $13.48 billion, a P/E ratio of 10.10 and a beta of 0.58.

Ares Capital (NASDAQ:ARCC - Get Free Report) last issued its earnings results on Wednesday, February 4th. The investment management company reported $0.50 earnings per share (EPS) for the quarter, hitting analysts' consensus estimates of $0.50. Ares Capital had a net margin of 42.56% and a return on equity of 9.89%. The firm had revenue of $793.00 million for the quarter, compared to analysts' expectations of $795.20 million. During the same quarter last year, the company posted $0.55 earnings per share. Ares Capital's revenue was up 4.5% on a year-over-year basis. As a group, sell-side analysts forecast that Ares Capital Corporation will post 2.19 earnings per share for the current year.

Ares Capital Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Tuesday, March 31st. Shareholders of record on Friday, March 13th were paid a $0.48 dividend. The ex-dividend date was Friday, March 13th. This represents a $1.92 annualized dividend and a dividend yield of 10.2%. Ares Capital's dividend payout ratio (DPR) is presently 103.23%.

Ares Capital Profile

Ares Capital Corporation NASDAQ: ARCC is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm's flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.

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