private_creditResolvedMiss

ARCC closes below $19.00 on 2026-09-18

Will Ares Capital Corporation (ARCC) close below $19.00 on 2026-09-18?

premise not yet verified

EHIQ

45%

(35-55%)

Market

31%

Edge

—

The call vs the market, dated

EHIQ called this at 45% on August 13, 2026 when the market was at 26%.

Market has since moved up to 31% · +5.0pp toward EHIQ view

Thesis

What makes us wrong

ARCC official NASDAQ close < 19.00 on 2026-09-18

Pebbles argues private credit's problem was never the returns, it was that nobody could see inside. The Walter filings are the first case where the inside became legible: two insurers he owns restated related-party investments from about $1.3B to roughly $18B after grand jury subpoenas, and the combined figure now stands at $25,121,775,179, 43% of invested assets. Nothing was bought or sold; the label changed. A Delaware regulator wants almost all of it gone by 2026-12-31. The read-through to ARCC is the mechanism rather than the name: if a related-party designation can move $17B without a transaction, marks in any lightly-traded private credit book are a policy choice rather than a price. ARCC is the largest, most liquid and most respected BDC, which makes it the hardest test of the thesis; a repricing there would not be idiosyncratic. EHIQ 45% (35-55) against 26.2% implied.

1.2026-08-13Walter statutory filings establish that affiliated-asset designations move without transactions: Delaware Life (NAIC 79065) restated related-party investments from ~$1.3B to ~$18B after Feb 2026 grand jury subpoenas; combined with Clear Spring (NAIC 83607) the figure is $25,121,775,179, or 43% of invested assets. Source: statutory statements purchased from NAIC InsData 2026-08-13.
2.2026-08-13Anchor extracted from the ARCC 2026-09-18 put chain by central difference, P(S<K)=[Put(K+1)-Put(K-1)]/2 at h=$1.00, using two-sided markets at $18 (0.05/0.10) and $20 (0.50/0.70). Template v1 section 2 source 3, instrument-implied.
3.2026-08-13FSK, the name held in the EMJ Capital short book, was rejected as the vehicle: its option grid is 10.00/12.50/15.00, i.e. $2.50 strikes on a $12.60 stock, which cannot carry a digital. BIZD and OBDC are thinner still. ARCC is the only BDC with $1 spacing and two-sided markets.
4.2026-08-13Case against the call, recorded at open: BDC spreads have been resilient through 2026, ARCC non-accruals sit below the cohort, and the read-through from an insurance filing to a BDC's traded price is two steps removed. A 26% market probability may simply be correct.

Resolution

Outcome

—

Resolved

September 18, 2026

Call asserted ARCC closes below $19.00 on 2026-09-18. ARCC closed $19.40 (week: 19.37/19.37/19.65/19.40) — never below $19.00. Outcome NO → miss. Resolution source: Nasdaq daily close 2026-09-18: $19.40 (yfinance).

Opened

August 13, 2026

Expected resolution

September 18, 2026

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