Comparing Oaktree Specialty Lending (NASDAQ:OCSL) and Westwood Holdings Group (NYSE:WHG)

Oaktree Specialty Lending (NASDAQ:OCSL) and Westwood Holdings Group (NYSE:WHG) 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, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Oaktree Specialty Lending and Westwood Holdings Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	0	6	0	0	2.00
Westwood Holdings Group	0	0	1	0	3.00

Oaktree Specialty Lending presently has a consensus price target of $11.83, suggesting a potential downside of 6.60%. Given Oaktree Specialty Lending’s higher possible upside, research analysts plainly believe Oaktree Specialty Lending is more favorable than Westwood Holdings Group.

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.5%. Westwood Holdings Group pays an annual dividend of $0.60 per share and has a dividend yield of 3.2%. Oaktree Specialty Lending pays out 250.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westwood Holdings Group pays out 68.2% of its earnings in the form of a dividend.

Risk & Volatility

Oaktree Specialty Lending has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Westwood Holdings Group has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Earnings & Valuation

This table compares Oaktree Specialty Lending and Westwood Holdings Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$53.53 million	20.85	$33.92 million	$0.48	26.40
Westwood Holdings Group	$101.70 million	1.75	$7.06 million	$0.88	21.35

Oaktree Specialty Lending has higher earnings, but lower revenue than Westwood Holdings Group. Westwood Holdings Group is trading at a lower price-to-earnings ratio than Oaktree Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Oaktree Specialty Lending and Westwood Holdings Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	14.45%	9.70%	4.64%
Westwood Holdings Group	7.73%	8.10%	6.59%

Insider & Institutional Ownership

36.8% of Oaktree Specialty Lending shares are owned by institutional investors. Comparatively, 56.6% of Westwood Holdings Group shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned by company insiders. Comparatively, 17.4% of Westwood Holdings Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Westwood Holdings Group beats Oaktree Specialty Lending on 9 of the 16 factors compared between the two stocks.

About Oaktree Specialty Lending

Oaktree Specialty Lending Corporation is a business development company. The fund specializing in investments in middle market, bridge financing, first and second lien debt financing, unsecured and mezzanine loan, mezzanine debt, senior and junior secured debt, expansions, sponsor-led acquisitions, preferred equity, and management buyouts in small and mid-sized companies. It seeks to invest in education services, business services, retail and consumer, healthcare, manufacturing, food and restaurants, construction and engineering. The firm also seeks investment in media, advertising sectors, software, IT services, pharmaceuticals, biotechnology, real estate management and development, chemicals, machinery, and internet and direct marketing retail sectors. It invests between $5 million to $75 million principally in the form of one-stop, first lien, and second lien debt investments, which may include an equity co-investment component in companies. The firm invest in companies having enterprise value between $20 million and $150 million and EBITDA between $3 million and $50 million. The fund has a hold size of up to $75 million and may underwrite transactions up to $100 million. It primarily invests in North America. The fund seeks to be a lead investor in its portfolio companies.

About Westwood Holdings Group

Westwood Holdings Group, Inc., through its subsidiaries, manages investment assets and provides services for its clients. The company operates in two segments, Advisory and Trust. The Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, and the Westwood Funds; and investment sub-advisory services to mutual funds, pooled investment vehicles, and its Trust segment. The Trust segment offers trust and custodial services; and participates in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Holdings Group, Inc. was founded in 1983 and is based in Dallas, Texas.