Assessing Bullish vs. Bearish Sentiment on Ares Management Corp: Risk-Adjusted Perspective

Ares Management's stock has seen a modest surge in bearish sentiment recently. As of mid-August 2025, short interest rose 0.6% month-over-month to 7.81 million shares, with a 6.0-day short-covering horizon that analysts view as moderate but notable. Institutional activity remains ambiguous-while major players like Nomura and Bank of America held short positions, Nasdaq's tracking shows no clear directional consensus among large funds.

Performance contrasts with peers add nuance. Ares' year-to-date decline of 12% undercuts Blackstone's sharper 24% slide, yet both firms trade below intrinsic values (Ares at 29% undervaluation, Blackstone at 16%). Ares' free cash flow efficiency (83.9% margin) contrasts with weaker profitability metrics-19.6% operating margin versus Blackstone's 49.7%-highlighting divergent paths. While short sellers face potential squeeze risks if sentiment shifts, institutional ambiguity and profitability gaps temper bullish arguments. Investors remain caught between tactical undervaluation and structural profitability concerns.

Growth Sustainability Questioned

Ares Management's impressive asset growth and fundraising momentum, highlighted by 28% year-over-year AUM expansion and over $93 billion raised, provides a strong near-term earnings foundation. However, translating this scale into sustainable profitability remains a significant challenge. The firm's operating margin sits at just 19.6%, dramatically below peer Blackstone's 49.7%, indicating substantial pressure on costs relative to revenue generation. While the $150 billion in available capital offers substantial firepower for future growth, effectively deploying this capital at attractive returns is critical; misallocation could quickly erode already thin margins.

Furthermore, the substantial 29% undervaluation relative to intrinsic value signals market skepticism about the durability of current growth drivers. This discount reflects concerns beyond just profitability, encompassing the friction of scaling operations and the inherent risks in deploying massive capital efficiently. The gap with market-leading peers like Blackstone underscores the execution hurdles Ares must overcome. While free cash flow efficiency is strong at 83.9%, the lower ROE of 15.6% versus Blackstone's 35.2% further demonstrates the challenge of generating robust shareholder returns from this asset base. Prudent capital deployment and cost discipline over the next 12-24 months will be essential to justify the current valuation and prove growth sustainability.