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

Valuation & Earnings

This table compares Liberty All-Star Equity Fund and StoneCastle Financial’s 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
StoneCastle Financial $17.03 million 8.26 $7.01 million $1.76 12.23

StoneCastle Financial has higher revenue and earnings than Liberty All-Star Equity Fund.

Volatility & Risk

Liberty All-Star Equity Fund has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, StoneCastle Financial has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500.

Profitability

This table compares Liberty All-Star Equity Fund and StoneCastle Financial’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
StoneCastle Financial 66.86% N/A N/A

Analyst Ratings

This is a breakdown of current recommendations and price targets for Liberty All-Star Equity Fund and StoneCastle Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty All-Star Equity Fund 0 0 0 0 N/A
StoneCastle Financial 0 0 4 0 3.00

StoneCastle Financial has a consensus target price of $22.75, indicating a potential upside of 5.72%. Given StoneCastle Financial’s higher possible upside, analysts plainly believe StoneCastle Financial is more favorable than Liberty All-Star Equity Fund.

Insider & Institutional Ownership

26.6% of Liberty All-Star Equity Fund shares are owned by institutional investors. Comparatively, 32.0% of StoneCastle Financial shares are owned by institutional investors. 0.1% of Liberty All-Star Equity Fund shares are owned by company insiders. Comparatively, 8.0% of StoneCastle 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.

Dividends

Liberty All-Star Equity Fund pays an annual dividend of $0.13 per share and has a dividend yield of 2.1%. StoneCastle Financial pays an annual dividend of $1.52 per share and has a dividend yield of 7.1%. StoneCastle Financial pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

StoneCastle Financial beats Liberty All-Star Equity Fund on 7 of the 9 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.

StoneCastle Financial Company Profile

StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.

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