CM Finance (NASDAQ:CMFN) and OHA Investment (NASDAQ:OHAI) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Earnings and Valuation

This table compares CM Finance and OHA Investment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CM Finance $40.79 million 2.47 $15.62 million $1.39 5.32
OHA Investment $10.27 million 2.04 -$31.10 million N/A N/A

CM Finance has higher revenue and earnings than OHA Investment.

Institutional and Insider Ownership

50.7% of CM Finance shares are held by institutional investors. Comparatively, 31.2% of OHA Investment shares are held by institutional investors. 1.9% of CM Finance shares are held by company insiders. Comparatively, 4.5% of OHA Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for CM Finance and OHA Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CM Finance 0 2 1 0 2.33
OHA Investment 0 0 0 0 N/A

Profitability

This table compares CM Finance and OHA Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CM Finance 32.89% 11.33% 6.07%
OHA Investment -22.85% 2.10% 0.96%

Risk & Volatility

CM Finance has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, OHA Investment has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Dividends

CM Finance pays an annual dividend of $1.00 per share and has a dividend yield of 13.5%. OHA Investment pays an annual dividend of $0.08 per share and has a dividend yield of 7.7%. CM Finance pays out 71.9% of its earnings in the form of a dividend.

Summary

CM Finance beats OHA Investment on 10 of the 13 factors compared between the two stocks.

About CM Finance

CM Finance Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, and recapitalization investments. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest in companies with EBITDA more than $15 million. The fund is based in New York, New York.

About OHA Investment

OHA Investment Corporation is a business development company specializing in investments in small and mid size and middle market private companies. The fund typically invests in acquisitions, buyouts, growth, development, expansion, monetizations, revitalization, restructuring, recapitalizations, and special situations. It seeks to invest in energy, natural resources, niche manufacturing, value added distribution, business services, healthcare products and services, consumer services, etc. Within energy, the fund focuses on oil and gas production and development including limited exploration or technology risk; midstream including pipelines, storage, gathering and processing systems; coal mining, production, and services; and oilfield manufacturing. It seeks to invest in companies based in the United States. The fund primarily invests between $5 million and $100 million in its portfolio companies. It invests in the form of unitranche (combined senior and subordinated debt), secured, senior, and subordinate debt; convertible debt; preferred equity; project equity; loans; securities of foreign companies; production payments, net profits interests, and similar investments; and senior secured and mezzanine loans and may receive equity investments in portfolio companies in connection with such investments. The fund makes asset and project based investments in private companies and can also invest in public companies. It seeks to make exit by allowing the portfolio company to refinance the facility often with senior debt or by the sale of the portfolio company's assets or the entire company.

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