Analyst Explains Why She's Buying Ares Capital (ARCC) Despite Jamie Dimon's 'Cockroach' Warning

We recently published Trending Analyst Calls: 10 Stocks to Buy and Sell. Ares Capital Corporation (NASDAQ:ARCC) is one of the trending analyst calls.

Bryn Talkington, Managing Partner of Requisite Capital Management, explained in a recent program on CNBC why she’s buying Ares Capital Corporation (NASDAQ:ARCC) despite the latest concerns about the credit markets. She also commented on JPMorgan CEO Jamie Dimon’s recent warnings about potential debt-related problems. Dimon recently warned that there could be credit risks in the economy, saying that “when you see one cockroach, there are probably more.”

 “The comment about cockroaches, I mean, you know, just calling balls and strikes, you know JP Morgan I think took a $500 million hit from the revolving warehouse facility of Tricolor and other big banks had a lot of exposure to First Brands. And so I think in the credit markets, you know, credit’s always risky and underwriting standards I think is what the question is on Tricolor and First Brands specifically. Now as it relates to these publicly traded BDCs, first of all they don’t trade with a ton of volume but as investors these companies have quarterly earnings and these I think Ares comes out October 30th and then I think November 4th for Blue Owl. You can go on, look at their website, look at their investor relations, pull up their last earnings and look at the summary of investments and see with Blue Owl, you know, all 198 discrete tech investments. They really do more software, by the way. They do across the tech stack, but they’re more focused on software lending. And you can see exactly who they have loans with, what the yield is. And so I think in terms of transparency, this private credit narrative I think is a very broad brush of a heterogeneous asset class. And so with both of these, I can get about a 10% yield. They’re both trading between like 10 to 8% below book value. I think a year from now, I can look back and have a 20% total return in an asset class that I know I have complete transparency in both of these BDCs.”

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