Is ARI a good stock to buy? We came across a bullish thesis on Apollo Commercial Real Estate Finance, Inc. on The Mispricing Desk’s Substack. In this article, we will summarize the bulls’ thesis on ARI. Apollo Commercial Real Estate Finance, Inc.’s share was trading at $10.83 as of June 8th. ARI’s trailing and forward P/E were 13.48 and 15.53 respectively according to Yahoo Finance.
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Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments. ARI is emerging as a significantly cleaner and potentially undervalued commercial mortgage REIT following the completed sale of its commercial real estate loan portfolio to Athene for approximately $8.6 billion.
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The transaction fundamentally reshapes the company by removing the legacy loan book that had weighed on investor sentiment during the commercial real estate downturn. With the proceeds, ARI repaid its term loan and revolving credit facility in full and escrowed funds to redeem its $500 million secured notes, materially simplifying the balance sheet and reducing financial risk. Management’s filings indicate that the net cash proceeds together with the retained real estate positions should equate to roughly $12.05 of book value per share, yet the stock continues to trade meaningfully below that level, suggesting the market is still valuing ARI as if the troubled legacy portfolio remained intact.
The remaining assets consist primarily of cash and a limited group of retained real estate investments, including multifamily and hotel properties, rather than a large, complex credit book. Apollo has also outlined an 8% annualized dividend yield target on post-transaction book value and stated that if a compelling strategy is not identified by year-end 2026, the board could explore strategic alternatives, including dissolution.
This creates a clear catalyst framework while limiting the risk of the company remaining a perpetual value trap. With the balance-sheet reset already completed and the market still applying a legacy discount, ARI offers a compelling rerating opportunity alongside attractive income potential.
Previously, we covered a bullish thesis on Simon Property Group, Inc. (SPG) by David in April 2025, which highlighted the company’s shareholder-friendly capital allocation, resilient luxury-focused tenant base, and strong free cash flow supporting long-term dividend growth. SPG’s stock price has appreciated by approximately 40.04% since our coverage. The Mispricing Desk shares a similar view but emphasizes on Apollo Commercial Real Estate Finance, Inc.’s (ARI) balance-sheet reset and rerating potential following its portfolio sale.
Apollo Commercial Real Estate Finance, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held ARI at the end of the first quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of ARI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ARI and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
