Critical Analysis: TriplePoint Venture Growth BDC (NYSE:TPVG) and Chicago Atlantic BDC (NASDAQ:LIEN)

Chicago Atlantic BDC (NASDAQ:LIEN) and TriplePoint Venture Growth BDC (NYSE:TPVG) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Insider and Institutional Ownership

4.4% of Chicago Atlantic BDC shares are held by institutional investors. Comparatively, 12.8% of TriplePoint Venture Growth BDC shares are held by institutional investors. 16.9% of Chicago Atlantic BDC shares are held by company insiders. Comparatively, 1.6% of TriplePoint Venture Growth BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Chicago Atlantic BDC and TriplePoint Venture Growth BDC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chicago Atlantic BDC	$54.30 million	4.20	$33.28 million	$1.50	6.67
TriplePoint Venture Growth BDC	$90.93 million	2.49	$49.21 million	$1.06	5.27

TriplePoint Venture Growth BDC has higher revenue and earnings than Chicago Atlantic BDC. TriplePoint Venture Growth BDC is trading at a lower price-to-earnings ratio than Chicago Atlantic BDC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Chicago Atlantic BDC and TriplePoint Venture Growth BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chicago Atlantic BDC	57.88%	11.67%	10.30%
TriplePoint Venture Growth BDC	46.77%	11.54%	4.97%

Analyst Ratings

This is a summary of current ratings and price targets for Chicago Atlantic BDC and TriplePoint Venture Growth BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chicago Atlantic BDC	0	0	0	1	4.00
TriplePoint Venture Growth BDC	2	4	0	0	1.67

TriplePoint Venture Growth BDC has a consensus target price of $5.63, suggesting a potential upside of 0.70%. Given TriplePoint Venture Growth BDC’s higher possible upside, analysts clearly believe TriplePoint Venture Growth BDC is more favorable than Chicago Atlantic BDC.

Volatility and Risk

Chicago Atlantic BDC has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, TriplePoint Venture Growth BDC has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.

Dividends

Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 13.6%. TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 16.5%. Chicago Atlantic BDC pays out 90.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TriplePoint Venture Growth BDC pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TriplePoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Chicago Atlantic BDC beats TriplePoint Venture Growth BDC on 9 of the 16 factors compared between the two stocks.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.