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Steven Bavaria
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Steven Bavaria writes about finance, economics and politics, drawing on his forty-five years experience in international banking, credit, investment, human resources/training, journalism and public service. Now retired from his "day job" on Wall Street, Bavaria lives mostly off his investments.... More
My book:
TOO GREEDY FOR ADAM SMITH: CEO Pay and the Demise of Capitalism
  • New Oxford Lane Shares Credited, Well In Time For March Dividend 3 comments
    Mar 11, 2014 2:13 PM

    I was happy to see that the Oxford Lane Capital Corp. (NASDAQ:OXLC) shares that I bought via the recent rights offering were credited to my brokerage account today, thus ensuring that investors will indeed have them well before the record date (March 17) for the upcoming March dividend (regular dividend 60 cents, plus a 10 cent special).

    The rights offering was so over-subscribed that the company decided to issue an extra 2.4 million shares. While I'm happy to see the additional interest in the stock by institutional investors and others, the overhang of the additional shares has brought the price down below the $17 rights exercise price. The 70 cent dividend, that we're now assured of receiving, helps to salve the wound a bit in terms of the dropping price, and we'll see whether the price drops all the way to $16.30 (i.e. $17 minus the amount of the dividend) after the ex-dividend date. Investors who had hoped to arbitrage the rights offering by buying at $17 and selling out post-dividend at a profit may be out of luck. What is less clear are the pluses and minuses of the rights offering and expanded investor base for long term holders.

    Disclosure: I am long OXLC.

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Comments (3)
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  • Tack
    , contributor
    Comments (16502) | Send Message
    Well, we know for a 100% certainty that the price will drop by 70 cents at the post-close ex-dividend. It remains to be seen where investors drive it afterward.
    11 Mar 2014, 02:21 PM Reply Like
  • Argyll
    , contributor
    Comments (981) | Send Message
    Now it feels silly to have exercised the rights offering, which I did.
    11 Mar 2014, 04:03 PM Reply Like
  • shourey
    , contributor
    Comments (152) | Send Message
    OXLC management hoodwinked its investors. When I participated in the rights offering , it was not expected that they would also subsequently and concurrently do a secondary ( even after all their rights offering targets were met ) . It doesn't feel good to be cheated. Of course OXLC management had planned this secondary and it was not an after thought to their rights offereing. In fact if the rights offering targets were met there was no justification to this secondary. THE rights offering was a well planned and executed trap by OXLC management. Congratulations.
    11 Mar 2014, 07:14 PM Reply Like
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