Critical Analysis: Fairfax India (OTCMKTS:FFXDF) versus Hamilton Lane (NASDAQ:HLNE)

Fairfax India (OTCMKTS:FFXDF) and Hamilton Lane (NASDAQ:HLNE) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Insider & Institutional Ownership

0.2% of Fairfax India shares are held by institutional investors. Comparatively, 97.4% of Hamilton Lane shares are held by institutional investors. 22.2% of Hamilton Lane shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Fairfax India and Hamilton Lane’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fairfax India	N/A	8.20%	6.44%
Hamilton Lane	32.83%	25.98%	15.56%

Risk and Volatility

Fairfax India has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Hamilton Lane has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Fairfax India and Hamilton Lane, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fairfax India	0	0	0	0	0.00
Hamilton Lane	0	4	6	0	2.60

Hamilton Lane has a consensus target price of $150.00, indicating a potential upside of 66.08%. Given Hamilton Lane’s stronger consensus rating and higher probable upside, analysts clearly believe Hamilton Lane is more favorable than Fairfax India.

Earnings & Valuation

This table compares Fairfax India and Hamilton Lane”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fairfax India	$608.85 million	3.81	$410.53 million	$1.85	9.29
Hamilton Lane	$758.99 million	6.64	$217.42 million	$5.91	15.28

Fairfax India has higher earnings, but lower revenue than Hamilton Lane. Fairfax India is trading at a lower price-to-earnings ratio than Hamilton Lane, indicating that it is currently the more affordable of the two stocks.

Summary

Hamilton Lane beats Fairfax India on 13 of the 14 factors compared between the two stocks.

About Fairfax India

Fairfax India Holdings Corporation operates as an investment holding company in India. It invests in public and private equity securities and debt instruments in India and Indian businesses, or other businesses with customers, suppliers, or business primarily conducted and dependent in India. The company was incorporated in 2014 and is headquartered in Toronto, Canada. Fairfax India Holdings Corporation is a subsidiary of Fairfax Financial Holdings Limited.

About Hamilton Lane

Hamilton Lane Incorporated is a private equity firm specializing in early venture, emerging growth, turnaround, middle market, mature, mid-venture, bridge, buyout, distressed/vulture, loan, mezzanine in growth capital companies. It prefers to invest in energy, industrials, consumer discretionary, health care, real estate, information technology, utilities, and consumer services. The firm prefers to invest in Africa/Middle East, Asia/Pacific, Europe, Latin America and Caribbean, United States of America, and Canada. The firm prefers to invest between $1 million and $100 million. It prefers to take majority stake. Hamilton Lane Incorporated was founded in 1991 and is based in Conshohocken, Pennsylvania with additional offices across Europe, North America, Asia Pacific and the Middle East.