Analyzing Liberty All-Star Equity Fund (USA) & Apollo Investment (AINV)

Liberty All-Star Equity Fund (NYSE: USA) and Apollo Investment (NASDAQ:AINV) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Institutional & Insider Ownership

26.6% of Liberty All-Star Equity Fund shares are owned by institutional investors. Comparatively, 46.5% of Apollo Investment shares are owned by institutional investors. 0.1% of Liberty All-Star Equity Fund shares are owned by company insiders. Comparatively, 0.3% of Apollo Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Liberty All-Star Equity Fund pays an annual dividend of $0.13 per share and has a dividend yield of 2.0%. Apollo Investment pays an annual dividend of $0.60 per share and has a dividend yield of 10.4%. Apollo Investment pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Liberty All-Star Equity Fund and Apollo Investment’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
Apollo Investment 47.83% 8.64% 5.16%

Volatility and Risk

Liberty All-Star Equity Fund has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500. Comparatively, Apollo Investment has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares Liberty All-Star Equity Fund and Apollo Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Liberty All-Star Equity Fund N/A N/A N/A N/A N/A
Apollo Investment $279.86 million 4.51 $18.37 million $0.36 16.06

Apollo Investment has higher revenue and earnings than Liberty All-Star Equity Fund.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Liberty All-Star Equity Fund and Apollo Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty All-Star Equity Fund 0 0 0 0 N/A
Apollo Investment 1 4 4 0 2.33

Apollo Investment has a consensus price target of $6.41, suggesting a potential upside of 10.83%. Given Apollo Investment’s higher probable upside, analysts clearly believe Apollo Investment is more favorable than Liberty All-Star Equity Fund.

Summary

Apollo Investment beats Liberty All-Star Equity Fund on 9 of the 11 factors compared between the two stocks.

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.

Apollo Investment Company Profile

Apollo Investment Corporation is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation. It invests primarily in various forms of debt investments, including secured and unsecured debt, loan investments and/or equity in private middle-market companies. It may also invest in the securities of public companies and in structured products and other investments, such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). Its portfolio also includes equity interests, such as common stock, preferred stock, warrants or options. It invests in investments in the United States secured and unsecured loans, other debt securities and equity, and may also invests a portion of the portfolio in other investment opportunities, including foreign securities and structured products. Apollo Investment Management, L.P. is the investment advisor of the Company.

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