Critical Analysis: Great Elm Capital (NASDAQ:GECC) versus Acadian Asset Management (NYSE:AAMI)

Great Elm Capital (NASDAQ:GECC) and Acadian Asset Management (NYSE:AAMI) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, risk, analyst recommendations, earnings and dividends.

Valuation and Earnings

This table compares Great Elm Capital and Acadian Asset Management”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Great Elm Capital	$8.51 million	14.71	$25.33 million	$0.40	27.10
Acadian Asset Management	$505.60 million	2.15	$85.00 million	$2.41	12.16

Acadian Asset Management has higher revenue and earnings than Great Elm Capital. Acadian Asset Management is trading at a lower price-to-earnings ratio than Great Elm Capital, indicating that it is currently the more affordable of the two stocks.

Dividends

Great Elm Capital pays an annual dividend of $1.48 per share and has a dividend yield of 13.7%. Acadian Asset Management pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. Great Elm Capital pays out 370.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Acadian Asset Management pays out 1.7% of its earnings in the form of a dividend. Great Elm Capital has raised its dividend for 2 consecutive years. Great Elm Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Great Elm Capital and Acadian Asset Management, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Great Elm Capital	0	0	0	0	0.00
Acadian Asset Management	0	3	0	0	2.00

Acadian Asset Management has a consensus target price of $25.67, suggesting a potential downside of 12.40%. Given Acadian Asset Management’s stronger consensus rating and higher possible upside, analysts plainly believe Acadian Asset Management is more favorable than Great Elm Capital.

Volatility & Risk

Great Elm Capital has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Acadian Asset Management has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Profitability

This table compares Great Elm Capital and Acadian Asset Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Great Elm Capital	15.00%	11.60%	4.25%
Acadian Asset Management	16.81%	1,000.27%	18.11%

Insider & Institutional Ownership

38.8% of Great Elm Capital shares are owned by institutional investors. Comparatively, 98.7% of Acadian Asset Management shares are owned by institutional investors. 8.7% of Great Elm Capital shares are owned by insiders. Comparatively, 26.0% of Acadian Asset Management shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Acadian Asset Management beats Great Elm Capital on 12 of the 16 factors compared between the two stocks.

About Great Elm Capital

Great Elm Capital Corp. is a business development company which specializes in loan and mezzanine, middle market investments. It invests in the debt instruments of middle market companies. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

About Acadian Asset Management

Acadian Asset Management Inc. is a publically owned asset management holding company. The firm provides its services to individuals and institutions. It manages separate client focused portfolios through its subsidiaries. The firm also launches equity mutual funds for its clients. It invests in public equity, fixed income, and alternative investment markets through its subsidiaries. The firm was founded in 1980 is based Boston, Massachusetts. It was formally known as BrightSphere Investment Group plc. BrightSphere Investment Group Inc. was formed in 1980 and is based in Boston, Massachusetts.