Financial Contrast: Compass Diversified (NYSE:CODI) versus INV VK HI INC2 (NYSE:VLT)

Compass Diversified (NYSE:CODI) and INV VK HI INC2 (NYSE:VLT) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Compass Diversified and INV VK HI INC2, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass Diversified	1	3	1	0	2.00
INV VK HI INC2	0	0	0	0	0.00

Compass Diversified currently has a consensus price target of $12.75, suggesting a potential upside of 25.83%. Given Compass Diversified’s stronger consensus rating and higher probable upside, research analysts clearly believe Compass Diversified is more favorable than INV VK HI INC2.

Profitability

This table compares Compass Diversified and INV VK HI INC2’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass Diversified	-12.30%	-9.53%	0.06%
INV VK HI INC2	N/A	N/A	N/A

Insider and Institutional Ownership

72.7% of Compass Diversified shares are owned by institutional investors. Comparatively, 21.6% of INV VK HI INC2 shares are owned by institutional investors. 1.6% of Compass Diversified shares are owned by insiders. Comparatively, 1.0% of INV VK HI INC2 shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Compass Diversified and INV VK HI INC2″s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass Diversified	$1.87 billion	0.41	-$226.41 million	($3.91)	-2.59
INV VK HI INC2	N/A	N/A	N/A	N/A	N/A

INV VK HI INC2 has lower revenue, but higher earnings than Compass Diversified.

Risk and Volatility

Compass Diversified has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, INV VK HI INC2 has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Summary

Compass Diversified beats INV VK HI INC2 on 8 of the 10 factors compared between the two stocks.

About Compass Diversified

Compass Diversified is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, healthcare, safety & security, electronic components, food and foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $100 million and $800 million in companies with an EBITDA between $15 million to $80 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Diversified was founded in 2006 and is based in Westport, Connecticut with an additional office in Costa Mesa, California.

About INV VK HI INC2

Invesco High Income Trust II is a closed ended fixed income mutual fund launched by Invesco Ltd. The fund is co-managed by Invesco Advisers, Inc, INVESCO Asset Management (Japan) Limited, INVESCO Asset Management Deutschland GmbH, INVESCO Asset Management Limited, Invesco Hong Kong Limited, INVESCO Senior Secured Management, Inc., and Invesco Canada Ltd. It invests in the fixed income markets. The fund seeks to invest in securities rated between BB and C by Standard and Poor's. It seeks to maintain an average duration of around three to four years for its portfolio. The fund benchmarks the performance of its portfolio against the Barclays U.S. Corporate High Yield 2% Issuer Cap Inde. It was formerly known as Invesco Van Kampen High Income Trust II. Invesco High Income Trust II was formed on April 28, 1989 and is domiciled in the United States.