Metalpha Technology (NASDAQ:MATH) and Capital Southwest (NASDAQ:CSWC) Head-To-Head Comparison

Capital Southwest (NASDAQ:CSWC) and Metalpha Technology (NASDAQ:MATH) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Dividends

Capital Southwest pays an annual dividend of $2.32 per share and has a dividend yield of 10.9%. Metalpha Technology pays an annual dividend of $0.10 per share and has a dividend yield of 4.2%. Capital Southwest pays out 156.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capital Southwest has increased its dividend for 2 consecutive years. Capital Southwest is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

23.4% of Capital Southwest shares are held by institutional investors. Comparatively, 30.5% of Metalpha Technology shares are held by institutional investors. 4.2% of Capital Southwest shares are held by company insiders. Comparatively, 5.9% of Metalpha Technology shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Capital Southwest and Metalpha Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capital Southwest	0	2	1	0	2.33
Metalpha Technology	0	0	0	0	0.00

Capital Southwest presently has a consensus price target of $22.67, indicating a potential upside of 6.07%. Given Capital Southwest’s stronger consensus rating and higher probable upside, analysts clearly believe Capital Southwest is more favorable than Metalpha Technology.

Volatility & Risk

Capital Southwest has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Metalpha Technology has a beta of -1.24, suggesting that its stock price is 224% less volatile than the S&P 500.

Valuation and Earnings

This table compares Capital Southwest and Metalpha Technology”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capital Southwest	$98.09 million	11.02	$83.39 million	$1.48	14.44
Metalpha Technology	$30.86 million	2.97	-$3.68 million	N/A	N/A

Capital Southwest has higher revenue and earnings than Metalpha Technology.

Profitability

This table compares Capital Southwest and Metalpha Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Capital Southwest	33.49%	15.18%	7.37%
Metalpha Technology	N/A	N/A	N/A

Summary

Capital Southwest beats Metalpha Technology on 12 of the 15 factors compared between the two stocks.

About Capital Southwest

Capital Southwest Corporation is a business development company specializing in credit and private equity and venture capital investments in middle market companies, mezzanine, later stage, mature, late venture, emerging growth, buyouts, industry consolidation, recapitalizations and growth capital investments. It does not invest in startups, publicly traded companies, real estate developments, project finance opportunities, oil and gas exploration businesses, troubled companies, turnarounds, and companies in which significant senior management is departing. In lower middle market, the firm typically invests in growth financing, bolt-on acquisitions, new platform acquisitions, refinancing, dividend recapitalizations, sponsor-led buyouts, and management buyouts situations. The investment structures are Unitranche debt, subordinated debt, senior debt, first and second lien debt, and preferred and common equity. The firm makes equity co-investments alongside debt investments, up to 20% of total check and only makes non-control investments. The firm is Industry agnostic, but it prefers to invest in Industrial manufacturing and services, value-added distribution, healthcare products and services, business services, specialty chemicals, food and beverage, tech-enabled services and SaaS models. The firm seeks to invest in energy services and products, industrial technologies, and specialty chemicals and products. Within energy services and products, the firm seeks to invest in each segment of the industry, including upstream, midstream and downstream, excluding exploration and production with a focus on differentiated products and services, equipment and tool rental, consumable products, and drilling and completion chemicals. Within industrial technologies, it seeks to invest in automation and process controls, handling and packaging equipment, industrial filtration and fluid handling, measurement, monitoring and testing, professional tools, and sensors and instrumentation. Within and specialty chemicals and products, the firm seeks to invest in businesses that develop and manufacture highly differentiated chemicals and products including adhesives, coatings and sealants, catalysts and absorbents, cosmeceuticals, fine chemicals, flavors and fragrances, performance lubricants, polymers, plastics and composites, chemical dispensing and filtration equipment, professional and industrial trade consumables and tools, engineered solutions for HVAC, plumbing, and electrical installations, specified high performance materials for fire protection and oilfield applications. It may also invest in exceptional opportunities in building products. The firm seeks to invest in the United States and North America. The firm seeks to make investments ranging from $5 million and $25 million in securities. It leads $5 to $70 million financings, Its Target holds of $5 million and $45 million, and the firm is willing to backstop up to $55mm with an active network of co-investors. It seeks to invest in the firm with minimum EBITDA is $3 million and $25 million. In addition to making direct investments, the firm allocates capital to syndicated first and second lien term loans in the upper middle market. Criteria for Upper Middle Market Syndicated 1st Lien is EBITDA Size more than $30 million, Closing Leverage greater than 4 times, investment hold size between $5 million and $7 million up to $15mm with senior loan fund, investment yield greater than 6.5%. Criteria for Upper Middle Market Syndicated 2nd Lien is EBITDA Size more than $50 million, Closing Leverage greater than 6 times, investment hold size between $5 million and $7 million, investment yield greater than 9%. It prefers to take a majority and minority stake. The firm has the flexibility to hold investments for very long period in its portfolio companies. It may also invest through warrants. The firm prefers to take Board participation in its portfolio companies. Capital Southwest Corporation was founded on April 19, 1961 and is based in Dallas, Texas.

About Metalpha Technology

Metalpha Technology Holding Limited, together with its subsidiaries, provides wealth management services in Hong Kong. The company offers digital asset-based wealth management services, which include issuing traditional financial and cryptocurrency derivative products to over-the-counter clients, providing crypto derivative market making services, and proprietary trading of digital assets and crypto derivative products; and securities advising and asset management services. It serves institutional investors and high-net-worth individuals. The company was formerly known as Dragon Victory International Limited and changed its name to Metalpha Technology Holding Limited in November 2022. The company was incorporated in 2015 and is headquartered in Wan Chai, Hong Kong.