Analyzing MidCap Financial Investment (NASDAQ:MFIC) and Sprott Focus Trust (NASDAQ:FUND)

MidCap Financial Investment (NASDAQ:MFIC) and Sprott Focus Trust (NASDAQ:FUND) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, earnings and valuation.

Insider & Institutional Ownership

28.5% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 12.6% of Sprott Focus Trust shares are owned by institutional investors. 1.1% of MidCap Financial Investment shares are owned by company insiders. Comparatively, 50.6% of Sprott Focus Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

MidCap Financial Investment has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, Sprott Focus Trust has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares MidCap Financial Investment and Sprott Focus Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	37.05%	11.37%	4.70%
Sprott Focus Trust	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MidCap Financial Investment and Sprott Focus Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	0	3	4	0	2.57
Sprott Focus Trust	0	0	0	0	0.00

MidCap Financial Investment presently has a consensus price target of $14.86, indicating a potential upside of 2.39%. Given MidCap Financial Investment’s stronger consensus rating and higher possible upside, equities analysts clearly believe MidCap Financial Investment is more favorable than Sprott Focus Trust.

Dividends

MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 10.5%. Sprott Focus Trust pays an annual dividend of $0.60 per share and has a dividend yield of 7.9%. MidCap Financial Investment pays out 97.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares MidCap Financial Investment and Sprott Focus Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$276.52 million	4.92	$118.76 million	$1.56	9.30
Sprott Focus Trust	$16.60 million	13.56	N/A	N/A	N/A

MidCap Financial Investment has higher revenue and earnings than Sprott Focus Trust.

Summary

MidCap Financial Investment beats Sprott Focus Trust on 10 of the 13 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

About Sprott Focus Trust

Sprott Focus Trust, Inc. is a closed-ended equity mutual fund launched and managed by Sprott Asset Management, LP. The fund is co-managed by Sprott Asset Management USA Inc. It invests in the public equity markets of the United States. The fund seeks to invest in stocks of companies operating across diversified sectors. It primarily invests in value stocks of companies across all market capitalizations. The fund benchmarks the performance of its portfolio against the Russell 3000 Index. It was formerly known as Royce Focus Trust, Inc. Sprott Focus Trust, Inc. was formed on March 2, 1988 and is domiciled in the United States.