Medley Capital Corporation (NYSE: MCC) and Liberty All-Star Equity Fund (NYSE:USA) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitabiliy, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

38.6% of Medley Capital Corporation shares are held by institutional investors. Comparatively, 31.3% of Liberty All-Star Equity Fund shares are held by institutional investors. 8.7% of Medley Capital Corporation shares are held by company insiders. Comparatively, 0.1% of Liberty All-Star Equity Fund shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Medley Capital Corporation and Liberty All-Star Equity Fund’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Medley Capital Corporation N/A N/A N/A $0.10 63.01
Liberty All-Star Equity Fund N/A N/A N/A N/A N/A

Volatility & Risk

Medley Capital Corporation has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Liberty All-Star Equity Fund has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Dividends

Medley Capital Corporation pays an annual dividend of $0.64 per share and has a dividend yield of 10.2%. Liberty All-Star Equity Fund pays an annual dividend of $0.13 per share and has a dividend yield of 2.3%. Medley Capital Corporation pays out 640.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Medley Capital Corporation and Liberty All-Star Equity Fund’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medley Capital Corporation 4.60% 8.10% 4.00%
Liberty All-Star Equity Fund N/A N/A N/A

Analyst Recommendations

This is a summary of current ratings and price targets for Medley Capital Corporation and Liberty All-Star Equity Fund, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medley Capital Corporation 0 5 0 0 2.00
Liberty All-Star Equity Fund 0 3 4 0 2.57

Medley Capital Corporation currently has a consensus price target of $7.38, indicating a potential upside of 17.06%. Liberty All-Star Equity Fund has a consensus price target of $37.90, indicating a potential upside of 574.41%. Given Liberty All-Star Equity Fund’s stronger consensus rating and higher possible upside, analysts clearly believe Liberty All-Star Equity Fund is more favorable than Medley Capital Corporation.

Summary

Medley Capital Corporation beats Liberty All-Star Equity Fund on 7 of the 11 factors compared between the two stocks.

Medley Capital Corporation Company Profile

Medley Capital Corporation is a non-diversified closed-end management investment company. The Company’s investment objective is to generate current income and capital appreciation by lending directly to privately-held middle market companies, primarily through directly originated transactions to help these companies expand their business, refinance and make acquisitions. Its investment portfolio includes senior secured first lien term loans, senior secured second lien term loans, unitranche, senior secured first lien notes, subordinated notes and warrants and minority equity securities. It may invest up to 100% of its assets in securities acquired directly from issuers in privately negotiated transactions. Its portfolio of investments includes industries, including banking, finance, insurance and real estate; construction and building; healthcare and pharmaceuticals; beverage and food, and telecommunications. MCC Advisors LLC is the Company’s investment advisor.

Liberty All-Star Equity Fund Company Profile

Liberty All-Star Equity Fund is a diversified, closed-end management investment fund. The Fund seeks total investment return comprising long-term capital appreciation and current income through investing primarily in a diversified portfolio of equity securities. It allocates its portfolio assets on an approximately equal basis among several independent investment management organizations having various investment styles recommended and monitored by its investment advisor. It invests at least 80% of its net assets in a diversified portfolio of equity securities. The Fund invests in various sectors, including financials, information technology, healthcare, consumer discretionary, consumer staples, industrials, energy, materials, real estate, utilities and telecommunication services. Its investment managers invest primarily for pension funds, endowments, foundations and other institutions. The Fund’s investment advisor is ALPS Advisors, Inc.

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