Financial Analysis: Liberty All-Star Equity Fund (USA) and TPG Specialty Lending (TSLX)
Liberty All-Star Equity Fund (NYSE: USA) and TPG Specialty Lending (NYSE:TSLX) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.
Insider & Institutional Ownership
31.1% of Liberty All-Star Equity Fund shares are held by institutional investors. Comparatively, 64.4% of TPG Specialty Lending shares are held by institutional investors. 0.1% of Liberty All-Star Equity Fund shares are held by company insiders. Comparatively, 4.9% of TPG Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Liberty All-Star Equity Fund pays an annual dividend of $0.13 per share and has a dividend yield of 2.3%. TPG Specialty Lending pays an annual dividend of $1.56 per share and has a dividend yield of 7.3%. TPG Specialty Lending pays out 71.9% of its earnings in the form of a dividend.
This table compares Liberty All-Star Equity Fund and TPG Specialty Lending’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Liberty All-Star Equity Fund||N/A||N/A||N/A|
|TPG Specialty Lending||60.77%||12.68%||7.41%|
Earnings and Valuation
This table compares Liberty All-Star Equity Fund and TPG Specialty Lending’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Liberty All-Star Equity Fund||N/A||N/A||N/A||N/A||N/A|
|TPG Specialty Lending||N/A||N/A||N/A||$2.17||9.83|
This is a summary of current ratings and target prices for Liberty All-Star Equity Fund and TPG Specialty Lending, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Liberty All-Star Equity Fund||0||2||2||0||2.50|
|TPG Specialty Lending||0||2||2||0||2.50|
Liberty All-Star Equity Fund currently has a consensus price target of $44.50, indicating a potential upside of 693.23%. TPG Specialty Lending has a consensus price target of $20.25, indicating a potential downside of 5.06%. Given Liberty All-Star Equity Fund’s higher possible upside, equities analysts clearly believe Liberty All-Star Equity Fund is more favorable than TPG Specialty Lending.
Volatility and Risk
Liberty All-Star Equity Fund has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, TPG Specialty Lending has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.
TPG Specialty Lending beats Liberty All-Star Equity Fund on 6 of the 9 factors compared between the two stocks.
About Liberty All-Star Equity Fund
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.
About TPG Specialty Lending
TPG Specialty Lending, Inc. is an externally managed, closed-end, non-diversified management investment company. The Company is a specialty finance company focused on lending to middle-market companies. It seeks to generate current income primarily in the United States-domiciled middle-market companies through direct originations of senior secured loans and originations of mezzanine and unsecured loans and investments in corporate bonds and equity securities. The Company invests in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Its first-lien debt may include standalone first-lien loans; last out first-lien loans; unitranche loans and secured corporate bonds. Its second-lien debt may include secured loans and secured corporate bonds, with a secondary priority behind first-lien debt. As of December 31, 2016, the Company’s portfolio was invested across 19 different industries. The Company’s investment advisor is TSL Advisers, LLC.
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