The World's Best Credit Investor is Buying These 5 Income Stocks

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Ares Management did not spring from a marketing deck or a Silicon Valley garage. It came out of a very specific Wall Street bloodline, the high yield and leveraged finance machine that Michael Milken built at Drexel Burnham Lambert in the 1980s, when "junk" bonds stopped being a punchline and became the fuel that powered buyouts, restructurings, and an entirely new class of credit investors.

Milken's shop proved a simple, disruptive point: if you can underwrite cash flows and structure the downside, you can finance companies that traditional lenders either cannot or will not touch.

That mindset remade corporate finance, and even after Drexel collapsed, the people trained in that era carried the playbook forward.

One of those people was Antony Ressler. He worked at Drexel in the high-yield bond department and rose into senior responsibility for new issues and syndication. Another was John Kissick, who built his career at Drexel and ultimately ran the firm's West Coast corporate finance operation.

If you want to understand Ares, start here. These are not "growth at any cost" operators.

They are credit people.

They learned in a world where a single bad structure can turn a good story into a permanent loss.

When Drexel died, Apollo was born. Apollo Global Management was founded in 1990 by Drexel alumni, and Ressler and Kissick were part of that broader constellation of Drexel trained talent that formed the firm in the wake of the collapse of the Milken Machine.

Apollo's early edge was never just private equity swagger. It was an ability to think like creditors first, to price complexity, and to monetize distress when others were still arguing about the headlines.

Ares was the next chapter, and it started as a credit chapter. Ares Management was founded in 1997 by Ressler and Kissick, alongside Bennett Rosenthal, with an initial focus that ran straight through the loan and CLO markets.

In the early years, Ares operated closely alongside Apollo as its West Coast affiliate, then separated more cleanly as a standalone platform after that initial incubation period. That detail matters because it tells you what Ares was meant to be: a purpose-built credit franchise, formed by people who had already watched multiple cycles and knew the difference between returns and return of capital.

Fast forward to today and you can see the same DNA, just scaled to institutional size. Ares is now a global alternative investment manager spanning credit, real estate, private equity and infrastructure. But credit remains the engine room.

The firm manages hundreds of billions of dollars, with credit representing the largest slice of assets under management. This is not a boutique. It is a capital markets utility built around one core competency: underwriting and structuring risk across the capital stack.

The principals operating the firm today reflect that same orientation toward process, committees, and repeatable decision making. Antony Ressler serves as Executive Chairman. Michael Arougheti is Co Founder and Chief Executive Officer. Kipp deVeer and Blair Jacobson serve as Co Presidents.

The modern Ares leadership bench is not a collection of celebrity portfolio managers. It is a management team built to run multiple credit verticals, multiple fund structures, and a permanent capital machine without losing the discipline that made the franchise in the first place.

So what are the principles, in plain English, that actually drive the Ares model?

First is a credit first view of the world. The firm emphasizes structured, senior oriented lending and repeatable underwriting across cycles, including direct lending where the lender is paid to be steady rather than spectacular.

The goal is consistent compounding, not home runs.

Second is an obsession with structure. In private credit, structure is the product. Pricing matters, but structure is survival. Ares has consistently emphasized conservative loan to value ratios, strong documentation, covenants, and lender protections in its direct lending portfolios.

That is Drexel era thinking updated for the private credit era: you win by making it hard to lose.

Third is origination as an edge. Ares is one of the largest self-originating direct lenders in the United States. In private credit, you do not want to be the buyer of whatever the Street could not place. You want proprietary flow, sponsor relationships, and the ability to say no without starving the pipeline.

Fourth is scale with specialization. Ares has expanded across strategies, geographies, and asset types, but it has done so with dedicated investment groups rather than forcing everything through one generic framework.

Credit mistakes often happen when investors assume one model fits every asset. Ares has tried to avoid that trap.

As for track record and reputation, those are earned in cycles. Over the past two decades, Ares has grown into one of the most prominent private credit managers in the world, consistently raising large funds and attracting institutional capital from pensions, sovereign wealth funds, and insurance companies. Its ability to close multi billion dollar direct lending vehicles speaks to both performance history and investor trust.

Reputation in credit is also defined by how a firm behaves when the cycle turns. The private credit industry is under scrutiny today as higher rates, tighter liquidity, and isolated deal level stress test underwriting models across the space.

Being regarded as one of the better credit firms does not mean you never have losses. It means your process is built for stress, your structures are built to absorb volatility, and your underwriting does not depend on perfect capital markets to make the math work.

And that brings us back to the beginning, to Drexel and Milken. The Drexel era created a generation of investors who understood that credit is not a side dish. Credit is control. Credit is negotiating leverage. Credit is the difference between being a spectator and being the adult in the room when liquidity disappears.

Rares took that lineage, filtered it through Apollo's early distressed and opportunistic playbook, and then industrialized it into a modern platform that can write large checks, originate directly, and still talk about structure like it actually matters.

That is why, in a world crowded with yield tourists and marketing machines, Ares is widely regarded as one of the premier credit investment firms operating today.

It is not an accident.

It is lineage, discipline, and a very long memory of what happens when credit is mispriced.

This credit first approach is one I have embraced for much of my career.

That is why I make a point each quarter to check the Ares 13f filing and see what they are buying and selling.

In the most recent filing I found it interesting that Ares was added to some of their largest Business Development Company (BDC) positions.

Given the recent headlines I find it interesting the credit experts at Ares were adding to private credit just as that segment began its journey to becoming the most unloved segment of the market.

Ares was buying more of the following BDCs:

Blue Owl Capital Corp. $OBDC ( ▼ 1.35% ) is one of the larger publicly traded BDCs and focuses primarily on senior secured lending to sponsor-backed middle market companies. The portfolio is heavily weighted toward first-lien floating rate loans, which has supported strong net investment income in the higher rate environment. Backed by Blue Owl's scaled direct origination platform, OBDC benefits from consistent deal flow and institutional relationships across private equity sponsors. The dividend yield is competitive within the sector and generally supported by recurring income, making it a core private credit income vehicle for many investors.

Blue Owl Capital is down just over 9% this year and yields more than 13% at the current price.

Golub Capital BDC $GBDC ( ▼ 0.64% ) has long been viewed as one of the more conservative and steady operators in the BDC space. The firm concentrates on senior secured loans to upper middle market borrowers, emphasizing capital preservation and disciplined underwriting. Golub's reputation is built on deep sponsor relationships and a long track record of navigating cycles without excessive credit losses. The yield may not always be the highest in the group, but the tradeoff has historically been stability in NAV and dependable dividend coverage.

Golub Capital is down a little over 11% in 2026 and yields over 12% at the current price.

Barings BDC $BBDC ( ▼ 0.74% ) is managed by Barings, a global asset manager with extensive experience across public and private credit markets. The portfolio is primarily first-lien senior secured loans, supplemented by selective second-lien positions and equity co-investments to enhance returns. In recent years, the strategy has leaned toward improving overall credit quality and maintaining strong dividend coverage while simplifying leverage. The backing of a large global credit platform provides sourcing advantages and diversification across industries.

Barings BDC's year-to-date decline is around 8% and its yield is more than 12%.

Blue Owl Technology Finance Corp. $OTF ( ▼ 0.87% ) is a specialty BDC focused on lending to technology-oriented companies, particularly in software, fintech, life sciences and other innovation-driven sectors. The portfolio is generally structured around senior secured loans with strong sponsor backing, but it carries more sector concentration than broadly diversified middle-market lenders. The appeal is exposure to growth-oriented borrowers with recurring revenue models, combined with floating-rate income and a competitive dividend yield. It offers investors a way to participate in private credit within the technology ecosystem without taking direct venture-style equity risk.

Because of its tech exposure, OTF shares are down over 23% this year and yield over 12%.

Ares Capital Corp. $ARCC ( ▼ 1.17% ) is the flagship BDC of Ares Management and one of the largest and most liquid vehicles in the entire sector. The portfolio is broadly diversified and primarily invested in senior secured loans to sponsor-backed companies across industries. ARCC benefits directly from Ares' massive private credit origination platform, giving it scale, underwriting depth and access to proprietary transactions. Over multiple cycles, it has developed a reputation for disciplined risk management, steady dividend payments and the ability to protect NAV during periods of credit stress, which is why many income-focused investors consider it a cornerstone BDC holding.

Simply put, this is the granddaddy of BDCs. After this year's almost-8% decline the shares yield over 10%.