Critical Analysis: Malaysia Fund (MAY) and KCAP Financial (KCAP)
Malaysia Fund (NYSE: MAY) and KCAP Financial (NASDAQ:KCAP) are both small-cap closed end funds companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.
Valuation and Earnings
This table compares Malaysia Fund and KCAP Financial’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|KCAP Financial||$36.20 million||3.51||-$1.03 million||$0.06||56.67|
This table compares Malaysia Fund and KCAP Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
KCAP Financial pays an annual dividend of $0.48 per share and has a dividend yield of 14.1%. Malaysia Fund does not pay a dividend. KCAP Financial pays out 800.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
20.2% of KCAP Financial shares are owned by institutional investors. 8.0% of KCAP Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a summary of current recommendations for Malaysia Fund and KCAP Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
KCAP Financial has a consensus target price of $9.75, suggesting a potential upside of 186.76%.
Volatility & Risk
Malaysia Fund has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, KCAP Financial has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500.
KCAP Financial beats Malaysia Fund on 9 of the 10 factors compared between the two stocks.
Malaysia Fund Company Profile
The Malaysia Fund, Inc. (the Fund) is a diversified, closed-end management investment company. The Fund’s investment objective is long-term capital appreciation through investment in equity securities of Malaysian companies. The Fund invests in sectors, such as automobiles, commercial banks, construction and engineering, construction materials, diversified financial services, electric utilities, food products, healthcare equipment and supplies, hotels, restaurants and leisure, industrial conglomerates, marine, multi-utilities, and multiline retail. Morgan Stanley Investment Management Inc. (MS Investment Management) serves as the United States investment advisor.
KCAP Financial Company Profile
KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.
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