If The SaaSpocalypse Scares You, Ares Capital Could Change How You Invest

If The SaaSpocalypse Scares You, Ares Capital Could Change How You Invest
Mar 23, 2026, 12:57 PM ETAres Capital (ARCC)ARES
Luca Socci
6.85K Followers
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Summary
Ares Capital is the largest BDC by market cap, offering a diversified, well-covered dividend portfolio primarily in floating-rate middle-market loans.
ARCC trades at a 10% discount to NAV, with a 10.7% dividend yield fully covered by NII, and has actively de-risked its portfolio toward first lien senior secured loans.
Management strategically focuses software exposure on foundational, deeply embedded platforms with proprietary data and regulated market clients, mitigating AI disruption risks.
I initiate ARCC with a cautious buy, targeting a potential 22% annual return if NAV stabilizes, but acknowledge high volatility and market sentiment risks.
Introduction
In this article, I want to initiate coverage on Ares Capital (ARCC), which has been, for quite a few years, the largest BDC by market cap. Investors like its wide portfolio of middle-market assets and investments and its dividend stability. Its distributions
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6.85K Followers
I’m a long-term investor focused on U.S. and European equities, with a dual emphasis on undervalued growth stocks and high-quality dividend growers. Through years of experience, I’ve learned that sustained profitability—evident in strong margins, stable and expanding free cash flow, and high returns on invested capital—is a more reliable driver of returns than valuation alone. I manage one of my portfolios publicly on eToro, where I qualified as a Popular Investor, allowing others to copy my real-time investment decisions. My background spans Economics, Classical Philology, Philosophy and Theology. This interdisciplinary foundation sharpens both my quantitative analysis and my ability to interpret market narratives through a broader, long-term lens. I started investing when I became a father. By managing wisely what I received and earn, I aim to ensure for me and my children that we don’t have so much that we don’t have to do anything, but that we have enough assets to be free to do what we want. The goal is not to free myself from work, but to make sure I can work in the place and in a way where I can fully express myself.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in ARCC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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