Reviewing Westwood Holdings Group (NYSE:WHG) & Oaktree Specialty Lending (NASDAQ:OCSL)

Oaktree Specialty Lending (NASDAQ:OCSL) and Westwood Holdings Group (NYSE:WHG) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, institutional ownership, valuation and profitability.

Institutional and Insider Ownership

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

Risk & Volatility

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

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.7%. 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.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$316.80 million	3.46	$33.92 million	$0.48	25.90
Westwood Holdings Group	$97.76 million	1.82	$7.06 million	$0.88	21.27

Oaktree Specialty Lending has higher revenue and earnings 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%

Analyst Ratings

This is a breakdown of current recommendations for Oaktree Specialty Lending and Westwood Holdings Group, as provided by MarketBeat.

	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 target price of $11.83, indicating a potential downside of 4.80%. Given Oaktree Specialty Lending’s higher possible upside, equities analysts clearly believe Oaktree Specialty Lending is more favorable than Westwood Holdings Group.

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.