Fortress Investment Group (NYSE: FIG) and Affiliated Managers Group (NYSE:AMG) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Insider and Institutional Ownership

43.9% of Fortress Investment Group shares are held by institutional investors. Comparatively, 95.3% of Affiliated Managers Group shares are held by institutional investors. 45.2% of Fortress Investment Group shares are held by insiders. Comparatively, 1.4% of Affiliated Managers Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Fortress Investment Group and Affiliated Managers Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortress Investment Group 0 4 0 0 2.00
Affiliated Managers Group 0 2 5 0 2.71

Fortress Investment Group currently has a consensus target price of $6.00, indicating a potential downside of 24.72%. Affiliated Managers Group has a consensus target price of $196.86, indicating a potential upside of 12.57%. Given Affiliated Managers Group’s stronger consensus rating and higher possible upside, analysts plainly believe Affiliated Managers Group is more favorable than Fortress Investment Group.

Dividends

Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Affiliated Managers Group pays an annual dividend of $0.80 per share and has a dividend yield of 0.5%. Fortress Investment Group pays out 81.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Affiliated Managers Group pays out 8.9% of its earnings in the form of a dividend.

Volatility & Risk

Fortress Investment Group has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500. Comparatively, Affiliated Managers Group has a beta of 1.65, indicating that its stock price is 65% more volatile than the S&P 500.

Valuation & Earnings

This table compares Fortress Investment Group and Affiliated Managers Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fortress Investment Group $950.66 million 1.84 $273.52 million $0.44 18.11
Affiliated Managers Group $2.21 billion 4.43 $842.60 million $9.02 19.39

Affiliated Managers Group has higher revenue and earnings than Fortress Investment Group. Fortress Investment Group is trading at a lower price-to-earnings ratio than Affiliated Managers Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fortress Investment Group and Affiliated Managers Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortress Investment Group 10.61% 38.79% 15.58%
Affiliated Managers Group 22.99% 17.45% 8.75%

Summary

Affiliated Managers Group beats Fortress Investment Group on 11 of the 16 factors compared between the two stocks.

Fortress Investment Group Company Profile

Fortress Investment Group LLC (Fortress) is an investment management firm. The Company operates through segments, including private equity funds, permanent capital vehicles, credit hedge funds, credit PE funds, liquid hedge funds and Logan Circle. Its business is to sponsor the formation of, and provide investment management services for, various investment funds, permanent capital vehicles and related managed accounts (the Fortress Funds). Fortress’s sources of income from the Fortress Funds are management fees, incentive income and investment income on its investments in the funds. As of December 31, 2016, the Company’s private equity business manages approximately $13.5 billion of assets under management (AUM); credit funds business manages approximately $18.1 billion of AUM; liquid hedge funds business manages over $4.6 billion of AUM, and Logan Circle business manages approximately $33.4 billion of AUM.

Affiliated Managers Group Company Profile

Affiliated Managers Group, Inc. is an asset management company with equity investments in boutique investment management firms. The Company operates in three segments, which represent its principal distribution channels: Institutional, Mutual Fund and High Net Worth. The equity method investments in the Institutional distribution channel are made in relationships with public and private client entities, including foundations, endowments, sovereign wealth funds and retirement plans for corporations and municipalities. The equity method investments in the Mutual Fund distribution channel are made in advisory or sub-advisory relationships with active return-oriented mutual funds, Undertakings for Collective Investment in Transferable Securities and other retail products. The equity method investments in the High Net Worth distribution channel are made in relationships with high net worth and ultra-high net worth individuals, families, trusts, foundations, endowments and retirement plans.

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