Oxford Lane Capital

OXLC

Market cap $1.47B

Oxford Lane Capital Corporation offers a super high yield but faces ongoing net asset value (NAV) erosion and principal risk. OXLC invests in CLO equity tranches, making it highly sensitive to interest rates, credit risk, and market volatility, especially in non-zero rate environments. Recent reverse split and distribution cuts highlight challenges and reinforce concerns about long-term capital preservation despite attractive income.

Oxford Lane Capital (OXLC) offers a 28% yield but suffers from severe long-term price erosion, making it unsuitable for robust income generation. OXLC invests almost entirely in risky CLO equity tranches, resulting in volatile returns and significant principal decay over time. Even when re-investing distributions, OXLC has produced a negative total return since IPO.

August saw continued gains across major indexes, with RSP and Dow outperforming the tech-heavy benchmarks toward the second half of the month. As the markets continue to hit and trade near all-time highs, now including the Dow Jones hitting all-time highs, I've been continuing to build up my cash position. At the same time, every month I do some buying to keep the income compounding on itself over the long term.

GREENWICH, Conn., Sept. 12, 2025 (GLOBE NEWSWIRE) -- Oxford Lane Capital Corp. (NasdaqGS: OXLC) (NasdaqGS: OXLCP) (NasdaqGS: OXLCL) (NasdaqGS: OXLCO) (NasdaqGS: OXLCZ) (NasdaqGS: OXLCN) (NasdaqGS: OXLCI) (NasdaqGS: OXLCG) (the “Company,” “we,” or “our”) today announced the following net asset value (“NAV”) estimate as of September 8, 2025. This estimate is being provided as of September 8, 2025 following the completion of the Company's previously disclosed 1-for-5 reverse stock split, effective September 5, 2025.

I am upgrading OXLC back to Buy for income investors, as the recent price drop presents a compelling opportunity to lock in high yields. Despite a distribution cut and a reverse split, OXLC still offers a robust 27% yield, with future income supported by new CLO investments yet to pay out. OXLC trades at a historically large discount to NAV, and management is actively repurchasing shares, enhancing value for existing shareholders.

I upgrade OXLC from 'strong sell' to 'sell' due to its 13% discount to NAV, offering a margin of safety. Risks remain high: leveraged loan default rates are projected to nearly double historical averages, threatening distributions and NAV. Management's share issuance above NAV and buybacks below NAV show confidence in their valuation, but fundamentals are still shaky.

GREENWICH, Conn., Sept. 08, 2025 (GLOBE NEWSWIRE) -- Oxford Lane Capital Corp. (NasdaqGS: OXLC) (the “Company”) reported that its previously announced 1-for-5 reverse stock split of its issued and outstanding shares of common stock, par value $0.01 per share (“Common Stock”), became effective at the close of business on September 5, 2025, with trading on a split-adjusted basis on the Nasdaq Stock Market at market open today, September 8, 2025. As a result of the reverse stock split, every five shares of Common Stock have been automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share. Trading in the Common Stock will continue on the Nasdaq Stock Market under the symbol “OXLC” but the new CUSIP number for the Common Stock following the reverse stock split is 691543 847 effective today, September 8, 2025.

We continue our discussion on debt, this time focusing on corporate borrowing. CLOs and BDCs are two pillars of the credit markets, powering the U.S. economy. Securities from these asset classes tend to be volatile due to interest rates and credit health, but have safer preferreds/baby bonds.

Steven Bavaria, from Inside the Income Factory, discusses credit assets like high-yield bonds, senior loans, and BDCs for stable, high-yield income, favoring closed-end funds for their resilience and discounts. Expense ratios for BDC ETFs like PBDC appear high due to accounting rules, but actual fund expenses are low—professional management adds only about 0.4%.

Ellington Credit: High Yield, Speculative CLO Fund