Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Investment Management & Fund Operators industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Investment Management & Fund Operators Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Investment Management & Fund Operators Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Investment Management & Fund Operators industry for Monday, April 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Investment Management & Fund Operators industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Bain Capital Specialty Finance Inc’s Value Grade

Value Grade:

Bain Capital Specialty Finance, Inc. is an externally managed specialty finance company focused on lending to middle market companies. The Company's investment objective is to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds. Its primary focus is capitalizing on opportunities within Bain Capital Credit’s Senior Direct Lending Strategy, which seeks to provide risk-adjusted returns and current income to investors by investing in middle-market companies with between $10 million and $150 million in annual earnings before interest, taxes, depreciation and amortization. It is focused on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. It is managed by BCSF Advisors, LP.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bain Capital Specialty Finance Inc has a Value Score of 72, which is considered to be undervalued.

When you look at Bain Capital Specialty Finance Inc’s price-to-sales ratio at 3.41 compared to the industry median at 3.79, this company has a lower price relative to revenue compared to its peers. This could make Bain Capital Specialty Finance Inc’s stock more attractive for value investors.

Bain Capital Specialty Finance Inc’s price-earnings ratio is 8.22 compared to the industry median at 13.86. This means it has a lower share price relative to earnings compared to its peers. This could make Bain Capital Specialty Finance Inc more attractive for value investors.

Now, let’s assess Bain Capital Specialty Finance Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 15.0, when compared to the industry median of 15.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bain Capital Specialty Finance Inc’s shareholder yield is higher than its industry median ratio of 3.74%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Bain Capital Specialty Finance Inc’s price-to-book ratio is lower than its industry median ratio of 1.06. This could make Bain Capital Specialty Finance Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bain Capital Specialty Finance Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bain Capital Specialty Finance Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.08. This could make Bain Capital Specialty Finance Inc more attractive because the lower P/FCF ratio indicates that Bain Capital Specialty Finance Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Cion Investment Corp’s Value Grade

Value Grade:

CION Investment Corporation is an externally managed, non-diversified closed-end management investment company. The Company's investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. Its portfolio is comprised primarily of investments in senior secured debt, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities, unsecured debt, and equity, of private and thinly traded United States middle-market companies. The Company's investment portfolio includes healthcare and pharmaceuticals, chemicals, plastics and rubber, high-tech industries, beverage, food and tobacco, capital equipment, banking, finance, insurance and real estate, aerospace and defense, construction and building, telecommunications, hotel, gaming, and leisure, automotive, and metals and mining. Its investment adviser is CION Investment Management, LLC.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cion Investment Corp has a Value Score of 78, which is considered to be undervalued.

Cion Investment Corp’s price-earnings ratio is 6.3 compared to the industry median at 13.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Cion Investment Corp more attractive for value investors.

Cion Investment Corp’s price-to-book ratio is higher than its peers. This could make Cion Investment Corp less attractive for value investors when compared to the industry median at 1.06.

You can read more about Cion Investment Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Mentor Capital Inc’s Value Grade

Value Grade:

Mentor Capital, Inc. is a public energy company. The Company targets the classic energy sectors of oil and gas, coal, uranium, and their related operations, with already established cash flows, especially through royalty payments. Its classic energy segment includes the fair value of securities investments in oil and gas through Exxon Mobil Corp. (XOM) stock, Occidental Petroleum Corp. (OXY) stock, and Chevron Corp. (CVX) stock, uranium through Cameco Corp. (CCJ) stock, and coal through Arch Resources, Inc. (ARCH) stock. It maintains a diverse and opportunistic acquisition focus. It also invests in its larger pre-initial public offering (IPO)-related acquisitions and fundings. Its subsidiaries include Mentor IP, LLC (MCIP), Mentor Partner I, LLC, (Partner I), Mentor Partner II, LLC (Partner II), and TWG, LLC (TWG).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mentor Capital Inc has a Value Score of 98, which is considered to be undervalued.

Mentor Capital Inc’s price-earnings ratio is 0.4 compared to the industry median at 13.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Mentor Capital Inc more attractive for value investors.

Mentor Capital Inc’s price-to-book ratio is higher than its peers. This could make Mentor Capital Inc less attractive for value investors when compared to the industry median at 1.06.

You can read more about Mentor Capital Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Noah Holdings Limited (ADR)’s Value Grade

Value Grade:

Noah Holdings Limited is a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China. The Company operates through three segments: wealth management, asset management and Internet finance. It also provides Internet finance services to clients in China. It provides direct access to China's high net worth population. With approximately 1,100 relationship managers in over 130 branch offices, its coverage network includes China's regions where high net worth population is concentrated, including the Yangtze River Delta, the Pearl River Delta, the Bohai Rim and other regions. Its product offerings consist primarily of over-the-counter (OTC) wealth management and OTC asset management products, mutual fund products and asset management plans originated in China and designed to cater to the needs of China's high net worth population.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Noah Holdings Limited (ADR) has a Value Score of 95, which is considered to be undervalued.

Noah Holdings Limited (ADR)’s price-earnings ratio is 6.4 compared to the industry median at 13.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Noah Holdings Limited (ADR) more attractive for value investors.

Noah Holdings Limited (ADR)’s price-to-book ratio is higher than its peers. This could make Noah Holdings Limited (ADR) less attractive for value investors when compared to the industry median at 1.06.

You can read more about Noah Holdings Limited (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Rand Capital Corp’s Value Grade

Value Grade:

Rand Capital Corporation is an externally managed business development company (BDC). The Company’s investment objective is to maximize total return to its shareholders with current income and capital appreciation by focusing its debt and related equity investments in privately held, lower middle market companies with committed and experienced managements in a variety of industries. The Company invests in businesses that have sustainable, differentiated and market proven products. The Company invest at least 70 % of total assets in qualifying assets and provide managerial assistance to the portfolio companies in which it invests. The Company's portfolio includes professional and business services, manufacturing, consumer product, software, distribution, automotive, and oil and gas. The Company's investment adviser is Rand Capital Management, LLC (RCM).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Rand Capital Corp has a Value Score of 72, which is considered to be undervalued.

Rand Capital Corp’s price-earnings ratio is 5.5 compared to the industry median at 13.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Rand Capital Corp more attractive for value investors.

Rand Capital Corp’s price-to-book ratio is higher than its peers. This could make Rand Capital Corp less attractive for value investors when compared to the industry median at 1.06.

You can read more about Rand Capital Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

BlackRock TCP Capital Corp’s Value Grade

Value Grade:

BlackRock TCP Capital Corp. is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to achieve high total returns through current income and capital appreciation. The Company invests primarily in the debt of middle-market companies, as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. It invests in various industries, including airlines, automobiles, building products, capital markets, commercial services and supplies, communications equipment, construction and engineering, consumer finance, containers and packaging, distributors, diversified consumer services, diversified financial services, diversified telecommunication services, electric utilities, and others. Its investment portfolio consisted of 142 portfolio companies and is invested in debt investments, primarily in senior secured debt.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

BlackRock TCP Capital Corp has a Value Score of 63, which is considered to be undervalued.

BlackRock TCP Capital Corp’s price-earnings ratio is 15.1 compared to the industry median at 13.9. This means that it has a higher price relative to its earnings compared to its peers. This makes BlackRock TCP Capital Corp less attractive for value investors.

BlackRock TCP Capital Corp’s price-to-book ratio is higher than its peers. This could make BlackRock TCP Capital Corp less attractive for value investors when compared to the industry median at 1.06.

You can read more about BlackRock TCP Capital Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Investment Management & Fund Operators Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Investment Management & Fund Operators stocks as well as other industrys.

Choosing Which of the 6 Best Investment Management & Fund Operators Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Bain Capital Specialty Finance Inc stock has a Value Grade of B.
• Cion Investment Corp stock has a Value Grade of B.
• Mentor Capital Inc stock has a Value Grade of A.
• Noah Holdings Limited (ADR) stock has a Value Grade of A.
• Rand Capital Corp stock has a Value Grade of B.
• BlackRock TCP Capital Corp stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Investment Management & Fund Operators industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Investment Management & Fund Operators Stocks

Want to learn more about Investment Management & Fund Operators stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Investment Management & Fund Operators Stocks for Monday, April 15
• Is Templeton Dragon Fund Inc (TDF) Stock a Good Investment?
• 6 Undervalued Investment Management & Fund Operators Stocks for Friday, April 12
• What You Need to Know About State Street Corp's Q1 Earnings

AAII Disclaimer

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