ARCC Borrow Market Tightens as Short Sellers Circle

Ares Capital Corporation faces a sharply constrained lending market. Every share available to borrow has been lent out — and short interest has climbed 35% in a single month.

A Loan Book Under Siege

Availability on ARCC has collapsed to near zero. On April 27, every share in the lending pool was lent out — a 100% utilization read, matching the 52-week peak. As of April 28, availability sits at just ~2%, meaning roughly one share remains for every fifty already borrowed.

That scarcity has a price. Cost to borrow hit 2.42% on April 28 — up 70% in one week and 66% over the past month. A month ago, ARCC was borrowing at around 1.46%. Short sellers are now paying materially more for an increasingly scarce resource.

Short Interest Jumps 35% in a Month

The demand driving that tightness is real. Short interest reached 43.7 million shares as of April 28. That's up 10% in one week and 35% over the past month. The official FINRA fortnightly settlement figure — as of April 15 — put short shares at 42.7 million, with days-to-cover at 6.2.

The ORTEX short score has tracked the pressure. It rose from 62.1 on April 17 to 64.3 on April 27 — a steady climb as the borrow market tightened.

Options Tell a Different Story

The put/call ratio sits at 1.52 — below the 20-day mean of 1.72, with a z-score of -1.39. That's a notably less bearish options read than recent weeks, when the PCR was running above 1.80 through most of April. Options traders appear to be reducing downside hedges even as short sellers pile in.

Earnings are next on May 7. That event may resolve some of the tension. The stock moved just -0.05% after its April 24 print, suggesting the market is not treating quarterly results as a major catalyst — at least not yet.

Analyst Backdrop: Targets Coming Down

Three firms have cut price targets recently. Citizens lowered to $22 on April 22. Keefe, Bruyette & Woods cut to $21 on April 16. Both maintained positive ratings. The mean analyst target sits at $22.75 — a 20% premium to the current $18.92 close. Analysts remain constructive, but they're edging their targets lower.

Insiders, by contrast, have been buyers. The CEO, CFO, COO, and a director all bought shares in February. Net insider purchases over the past 90 days total approximately $704K.

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What to watch: Whether availability tightens further ahead of the May 7 earnings call — and whether the cost to borrow continues climbing toward levels that force short sellers to cover.