Analyzing Grosvenor Capital Management (NASDAQ:GCMG) and Diamond Hill Investment Group (NASDAQ:DHIL)

Grosvenor Capital Management (NASDAQ:GCMGGet Rating) and Diamond Hill Investment Group (NASDAQ:DHILGet Rating) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

21.6% of Grosvenor Capital Management shares are held by institutional investors. Comparatively, 62.0% of Diamond Hill Investment Group shares are held by institutional investors. 77.3% of Grosvenor Capital Management shares are held by insiders. Comparatively, 3.5% of Diamond Hill Investment Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Grosvenor Capital Management pays an annual dividend of $0.40 per share and has a dividend yield of 4.7%. Diamond Hill Investment Group pays an annual dividend of $6.00 per share and has a dividend yield of 3.5%. Grosvenor Capital Management pays out 160.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diamond Hill Investment Group pays out 27.5% of its earnings in the form of a dividend. Diamond Hill Investment Group has increased its dividend for 1 consecutive years.

Profitability

This table compares Grosvenor Capital Management and Diamond Hill Investment Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Grosvenor Capital Management 4.04% -187.86% 20.71%
Diamond Hill Investment Group 37.55% 32.76% 22.90%

Earnings & Valuation

This table compares Grosvenor Capital Management and Diamond Hill Investment Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Grosvenor Capital Management $531.59 million 2.99 $21.48 million $0.25 33.80
Diamond Hill Investment Group $182.19 million 3.01 $74.20 million $21.85 7.91

Diamond Hill Investment Group has lower revenue, but higher earnings than Grosvenor Capital Management. Diamond Hill Investment Group is trading at a lower price-to-earnings ratio than Grosvenor Capital Management, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Grosvenor Capital Management and Diamond Hill Investment Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Grosvenor Capital Management 0 1 1 0 2.50
Diamond Hill Investment Group 0 0 0 0 N/A

Grosvenor Capital Management currently has a consensus price target of $11.00, indicating a potential upside of 30.18%. Given Grosvenor Capital Management’s higher possible upside, equities research analysts plainly believe Grosvenor Capital Management is more favorable than Diamond Hill Investment Group.

Volatility and Risk

Grosvenor Capital Management has a beta of 0.19, meaning that its stock price is 81% less volatile than the S&P 500. Comparatively, Diamond Hill Investment Group has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Summary

Diamond Hill Investment Group beats Grosvenor Capital Management on 10 of the 16 factors compared between the two stocks.

About Grosvenor Capital Management (Get Rating)

Grosvenor Capital Management, L.P. is global alternative asset management solutions provider. The firm primarily provides its services to pooled investment vehicles. It also provides its services to investment companies, high net worth individuals, pension and profit sharing plans and state or municipal government entities. The firm invests in equity and alternative investment markets of the United States and internationally. The firm invests in multi-strategy, credit-focused, equity-focused, macro-focused, commodity-focused, and other specialty portfolios. It focuses in hedge fund asset classes, private equity, real estate, and/or infrastructure, credit and absolute return strategies. It also focuses in primary fund investments, secondary fund investments, and co-investments with a focus on buyout, distressed debt, mezzanine, venture capital/growth equity investments. The firm seeks to make regionally-focused investments in middle-market buyout. It prefers to invest in aerospace and defense, advanced electronics, information technology, biosciences, and advanced materials. It focuses on Ohio and the Midwest region. The firm employs fundamental and quantitative analysis. Grosvenor Capital Management, L.P. was founded in 1971 and is based in Chicago, Illinois with additional offices in North America, Asia and Europe.

About Diamond Hill Investment Group (Get Rating)

Diamond Hill Investment Group, Inc., through its subsidiary, Diamond Hill Capital Management, Inc., provides investment advisory and fund administration services in the United States. It sponsors, distributes, and offers investment advisory and related services to its clients through pooled investment vehicles, including the Diamond Hill Funds, separately managed accounts, and model delivery programs. The company also provides fund administration services, including portfolio and regulatory compliance, treasury and financial oversight, and general business management and governance of the mutual fund complex, as well as oversight of back-office service providers, such as the custodian, fund accountant, and transfer agent. The company was founded in 1990 and is based in Columbus, Ohio.

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