On May 25, 2023, Michael Arougheti, Co-Founder, CEO, and President of Ares Management Corp (ARES, Financial), sold 367,539 shares of the company. This move comes amidst a year of insider trading activity that has seen Arougheti sell a total of 379,922 shares and make no purchases. In this article, we will delve into the details of this transaction, provide background on Arougheti and Ares Management Corp, and analyze the relationship between insider buy/sell activities and the stock price.
Who is Michael Arougheti?
Michael Arougheti is the Co-Founder, CEO, and President of Ares Management Corp, a leading global alternative investment manager. Arougheti has been with the company since its inception in 1997 and has played a pivotal role in its growth and success. Under his leadership, Ares Management Corp has expanded its operations and now manages approximately $207 billion in assets across various investment strategies, including credit, private equity, and real estate.
Ares Management Corp's Business Description
Ares Management Corp (ARES, Financial) is a global alternative investment manager that operates in the United States, Europe, Asia, and Australia. The company offers a diverse range of investment products and services across various asset classes, including credit, private equity, and real estate. Ares Management Corp's primary objective is to generate strong risk-adjusted returns for its investors while preserving capital and maintaining a focus on long-term value creation.
Insider Trends
Over the past year, insider transaction history for Ares Management Corp reveals a total of 1 insider buy and 18 insider sells. This trend suggests that insiders may have a bearish outlook on the company's stock, as they are more inclined to sell their shares rather than purchase more.
Valuation
On the day of Michael Arougheti's recent sale, shares of Ares Management Corp were trading at $83.45 apiece, giving the stock a market cap of $15,503.95 million. The price-earnings ratio stands at 76.07, which is higher than the industry median of 13.15 and higher than the company's historical median price-earnings ratio.
With a price of $83.45 and a GuruFocus Value of $72.36, Ares Management Corp has a price-to-GF-Value ratio of 1.15. This indicates that the stock is modestly overvalued based on its GF Value.
The GF Value is an intrinsic value estimate developed by GuruFocus, calculated using the following three factors:
- Historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at.
- A GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of business performance from Morningstar analysts.
Analysis of Insider Buy/Sell and Relationship with Stock Price
Insider trading activities can provide valuable insights into the sentiment of company insiders regarding the stock's future performance. In the case of Ares Management Corp, the trend of insider sells over the past year, including Michael Arougheti's recent sale, may suggest a bearish outlook. However, it is essential to consider other factors, such as the company's valuation and overall market conditions, before drawing any conclusions.
As mentioned earlier, Ares Management Corp's stock is currently trading at a modestly overvalued level based on its GF Value. This may be one of the reasons why insiders, including Arougheti, have been selling their shares. It is also possible that insiders are taking advantage of the stock's relatively high valuation to realize gains on their investments.
In conclusion, while the recent insider sell activity at Ares Management Corp, including Michael Arougheti's sale of 367,539 shares, may raise concerns for some investors, it is crucial to consider the broader context of the company's valuation and market conditions. Investors should conduct thorough research and analysis before making any decisions regarding their investments in Ares Management Corp.
