Topic: How To Invest

Hi, Pat. What is your view on Ares Capital Corp.? They seem to have an attractive dividend for a financial stock. Thanks.

Article Excerpt

Ares Capital Corp., $17.13, symbol ARCC on Nasdaq (Shares outstanding: 314.1 million; Market cap: $5.4 billion; www.arescapitalcorp.com), provides debt and equity financing to U.S. mid-sized companies and venture capital-backed businesses. Billionaire Tony Ressler heads Ares and its affiliates. Ares Capital initiates and invests in senior secured loans, mezzanine debt and, to a lesser extent, stock investments. The company’s loans generally entail higher risk. For example, mezzanine financing is a mixture of debt and equity financing private companies use to fund expansion. Mezzanine debt gives the lender the right to convert the debt to equity if the borrower defaults. Mezzanine financing typically involves less due diligence by the lender, and the borrower puts up little or no collateral. As of December 31, 2014, Ares Capital had $9.0 billion of assets, of which $8.2 billion was in debt and other income-producing securities, across 205 investments in its portfolio. Ares Capital holds a very high-risk portfolio of assets. It would drop quickly if stock markets fell. Even…

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