Markets

Insider Trading

Hedge Funds

Retirement

Opinion

Here’s Why Jim Cramer is Bearish on ARES Capital Corporation (NASDAQ:ARCC)

We recently published a list of Jim Cramer’s Latest Stock Portfolio: Top 10 RecommendationsSince ARES Capital Corporation (NASDAQ:ARCC) ranks 9th on the list, it deserves a deeper look.

Jim Cramer in a latest program talked about the concept of “suitability” of stocks in investing, which emphasizes the importance of picking individual stocks based on your personal context, circumstances and life goals instead of short-term market movements. Cramer recalled his days at the Harvard Law School and how he used to run to the library to read research reports on companies to dig out information on quality stocks on a week-to-week basis. When Cramer joined Goldman Sachs, an “executive” at the firm introduced him to the concept of suitability, advising him never to recommend stocks to people without knowing what they want out of investing. According to Cramer, that “best semiconductor stock” might not be good for all individuals and therefore it’s necessary to know the “tolerance” and risk appetite of investors.

Answering a question during the program, Cramer said technical analysis, including paying attention to RSI values, is “incredibly” important to him and he does not like to buy stocks if “their chart is bad.”

For this program we watched several latest programs of Jim Cramer and picked 10 stocks he talked about recently. These include stocks he’s bullish on as well as the ones he recommends selling. We have analyzed each stock in detail to see its fundamentals and know what the Wall Street believes about it. We have also mentioned hedge fund sentiment with each company. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

ARES Capital Corporation (NASDAQ:ARCC)

Number of Hedge Fund Investors: 17

Jim Cramer said he cannot recommend ARES Capital Corporation (NASDAQ:ARCC) despite its strong 9% dividend yield.

“I have no idea what loans they have, what’s inside the company so I cannot recommended that even though it has a good yield.”

ARES Capital Corporation (NASDAQ:ARCC) is an alternative investment manager  and a business development company focusing on acquisition, recapitalization, debt restructuring, financing, and leveraged buyout transactions. ARES Capital Corporation (NASDAQ:ARCC) shares have gained about 11% over the pats one year. There have been concerns that possible rate cuts would affect the stock since business development companies invest in debt securities of small to mid-sized companies. BDCs get impacted by rate cuts since they earn a spread between the interest income they receive from their investments and the interest expense they pay on their borrowings. Changes in interest rates can affect this spread.

During the first quarter, however, ARES Capital Corporation (NASDAQ:ARCC) saw strong deal activity. Commitments saw a 50% QoQ growth and a whopping 364% YoY growth. However, core EPS missed estimates and net investment income came in at $325 million, down from $345 million in the previous quarter, but higher than $318 million from last year.

The stock’s forward P/E is 8.87, down from the industry median of 10.7. However, for those who want to avoid upcoming headwinds from potential rate cuts, ARES Capital Corporation (NASDAQ:ARCC) might not be the best option.

Overall, ARES Capital Corporation (NASDAQ:ARCC) ranks 9th on Insider Monkey’s list titled Jim Cramer’s Latest Stock Portfolio: Top 10 Recommendations. While we acknowledge the potential of ARES Capital Corporation (NASDAQ:ARCC), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ARES Capital Corporation (NASDAQ:ARCC) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

The best part? You can discover everything about this company and its groundbreaking technology right now.

I’ve compiled everything you need to know about this groundbreaking company in a detailed, members-only report.

Trust me — you’ll want to read this report before putting another dollar into any tech stock.

For a ridiculously low price of just $9.99 a month, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single fast food meal!

Here’s why this is a deal you can’t afford to pass up:

• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.

• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.

• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149

• Bonus Reports: Premium access to members-only fund manager video interviews

• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.

• 30-Day Money-Back Guarantee:  If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.

If you’re thinking about getting in, don’t wait – because once Wall Street catches wind of this story, the easy money will be gone.

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $9.99 a month.

2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.

3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!

No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a month later!