Special Opportunities Fund (NYSE: SPE) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Special Opportunities Fund and Fidus Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Special Opportunities Fund 0 0 2 0 3.00
Fidus Investment 0 2 0 0 2.00

Special Opportunities Fund currently has a consensus target price of $9.63, indicating a potential downside of 39.84%. Fidus Investment has a consensus target price of $17.50, indicating a potential upside of 8.56%. Given Fidus Investment’s higher probable upside, analysts plainly believe Fidus Investment is more favorable than Special Opportunities Fund.

Valuation & Earnings

This table compares Special Opportunities Fund and Fidus Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Special Opportunities Fund N/A N/A N/A N/A N/A
Fidus Investment $60.23 million 6.55 $41.57 million $1.98 8.14

Fidus Investment has higher revenue and earnings than Special Opportunities Fund.

Risk and Volatility

Special Opportunities Fund has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Insider and Institutional Ownership

45.2% of Special Opportunities Fund shares are held by institutional investors. Comparatively, 32.1% of Fidus Investment shares are held by institutional investors. 22.4% of Special Opportunities Fund shares are held by insiders. Comparatively, 1.3% of Fidus Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Special Opportunities Fund pays an annual dividend of $0.56 per share and has a dividend yield of 3.5%. Fidus Investment pays an annual dividend of $1.56 per share and has a dividend yield of 9.7%. Fidus Investment pays out 78.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Special Opportunities Fund and Fidus Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Special Opportunities Fund N/A N/A N/A
Fidus Investment 64.21% 9.18% 5.75%

Summary

Fidus Investment beats Special Opportunities Fund on 7 of the 12 factors compared between the two stocks.

About Special Opportunities Fund

Special Opportunities Fund, Inc. (the Fund) is a diversified closed-end management investment company. The Fund’s investment objective is to achieve total return. The Fund’s investment portfolio consists of investment companies, common stocks, commodity partnerships, preferred stocks, money market funds, corporate notes, liquidating trusts, corporate bonds, promissory notes, senior unsecured notes, warrants and rights. The Company also invests in various sectors, such as construction materials; consumer finance; healthcare equipment and supplies; independent power and renewable electricity producers; insurance; personal products; professional services; real estate investment trusts, and special purpose acquisition vehicles. The Fund also invests in closed-end funds, auction rate preferred securities and business development companies, among others. Bulldog Investors, LLC acts as an investment advisor for the Fund.

About Fidus Investment

Fidus Investment Corporation is a closed-end, non-diversified investment company. The Company provides customized debt and equity financing solutions to lower middle-market companies. The Company’s investment objective is to provide attractive risk-adjusted returns by generating both current income from its debt investments and capital appreciation from its equity-related investments. The Company typically invests in mezzanine debt, which includes senior subordinated notes and junior secured loans. The Company structures some of its debt investments as senior secured or unitranche loans. The Company’s equity securities typically consist of either a direct minority equity investment in common or preferred stock or membership/partnership interests of a portfolio company, or it may receive warrants to buy a minority equity interest in a portfolio company in connection with a debt investment. Its investment activities are managed by Fidus Investment Advisors, LLC, its investment advisor.

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