Key Takeaways
- • Ares Management Corp. (NYSE: ARES) experienced a 9.1% single-day stock decline in a broad selloff among alternative asset managers driven by AI disruption fears, despite reporting record assets under management of $622 billion at year-end 2024.
- • Vulcan Value Partners added to its position in Ares during Q1 2025 market dislocations, viewing the alternative asset manager as a high-quality business with a leading private credit franchise positioned to benefit from market volatility.
- • CEO Mike Arougheti refuted market narrative claiming private credit portfolios face binary AI risk, emphasizing that senior-secured loans to high-free-cash-flow companies remain structurally attractive even under AI disruption scenarios.
- • Ares grew assets under management 29% year-over-year with dry powder reaching $156 billion (17% of AUM), driven primarily by US direct lending inflows and secondary investment demand from institutional clients.
- • Vulcan Value Partners' Large Cap Composite returned 7.0% net of fees in Q2 2025, with the firm maintaining its investment discipline focused on stable-value businesses rather than momentum-driven AI equities.
Summary
Ares Management Corp. faced significant market headwinds on April 22, 2026, as shares declined 9.1% amid a sector-wide selloff affecting alternative asset managers. The sell-off reflected investor concerns about artificial intelligence disruption affecting software companies held within private credit portfolios. However, this decline contrasted sharply with Ares' operational performance: the firm reported record assets under management of $622 billion at year-end 2024, alongside strong inflows during the final quarter driven by demand for private credit and secondary investments.
CEO Mike Arougheti directly addressed the market disconnect in media interviews, characterizing the AI narrative as fundamentally flawed. Arougheti argued that investors misunderstand the structural safety of Ares' portfolio exposures, noting that many software company financings discussed are senior-secured loans to established, high-free-cash-flow businesses. He emphasized that "even in a world where AI disruption happens in a portion of the portfolio, these are high-free-cash flow, high-returning" firms, suggesting the market was overlooking the loan-level credit quality underpinning the portfolio.
Vulcan Value Partners, a value-focused institutional investment manager, responded to the volatility by increasing its position in Ares during Q1 2025 market dislocations. In its second-quarter 2025 investor letter, Vulcan highlighted Ares as "one of the highest-quality alternative asset managers" with a leading private credit franchise, noting the firm's historical ability to grow market share during periods of capital market dislocation. Vulcan's perspective reflects its stated investment philosophy of seeking durable value in stable businesses rather than momentum-driven AI equity opportunities, even amid significant short-term volatility.
Ares' financial trajectory remained robust despite equity market concerns. Assets under management grew 4.5% in Q4 2024 and 29% for the full year, while dry powder expanded to $156 billion. This capital deployment capacity positioned Ares to capitalize on future market dislocations and client capital deployment opportunities, particularly within US direct lending markets where institutional demand remained concentrated.
CEO Mike Arougheti directly addressed the market disconnect in media interviews, characterizing the AI narrative as fundamentally flawed. Arougheti argued that investors misunderstand the structural safety of Ares' portfolio exposures, noting that many software company financings discussed are senior-secured loans to established, high-free-cash-flow businesses. He emphasized that "even in a world where AI disruption happens in a portion of the portfolio, these are high-free-cash flow, high-returning" firms, suggesting the market was overlooking the loan-level credit quality underpinning the portfolio.
Vulcan Value Partners, a value-focused institutional investment manager, responded to the volatility by increasing its position in Ares during Q1 2025 market dislocations. In its second-quarter 2025 investor letter, Vulcan highlighted Ares as "one of the highest-quality alternative asset managers" with a leading private credit franchise, noting the firm's historical ability to grow market share during periods of capital market dislocation. Vulcan's perspective reflects its stated investment philosophy of seeking durable value in stable businesses rather than momentum-driven AI equity opportunities, even amid significant short-term volatility.
Ares' financial trajectory remained robust despite equity market concerns. Assets under management grew 4.5% in Q4 2024 and 29% for the full year, while dry powder expanded to $156 billion. This capital deployment capacity positioned Ares to capitalize on future market dislocations and client capital deployment opportunities, particularly within US direct lending markets where institutional demand remained concentrated.
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