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Beyond The Common Stock Of Oxford Lane Capital


  • Oxford Lane Capital has six separate trading securities beyond the common stock OXLC. Four are preferreds and two are unsecured notes.
  • I'll take a look at the company's financials from the perspective of the preferred/note holders to evaluate their security.
  • Then I compare and review the six separate issues in relation to each.
  • If you own OXLCM, OXLCZ, OXLCP, OXLCN, OXLCO, and OXLCL you might say you own 23% of the alphabet. Read on to find out why two of these stand-out.
  • I do much more than just articles at Microcap Review: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

And that's one message that all of the alphabet soup OXLC shares can agree on.

Heidloss Tilo Geringswald Felix GbR/iStock via Getty Images

It's no secret that I find CLO CEFs like Oxford Lane Capital (NASDAQ:OXLC) to be poor investment candidates as I've made it clear in the past. My recent investigation into peer OFS Credit Company (OCCI


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This article was written by

Ryan Bowen profile picture
Joined the Seeking Alpha team as a Senior Editor in 2023. As part of being an Editor I no longer can write for the site but instead focus on ensuring we curate quality content.
I am a self-taught value investor along the Graham and Dodd line. My first objective is to not lose money. I seek to do this by ensuring any position I enter has a discernible margin of safety. The second thing I aim for is above-average returns.

Always open to questions and dialogue as I believe it only serves to improve us all.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ACR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (49)

For the last 3 years they have averaged selling 27 million shares per year at the market. The lower price the stock igoes the more shares they'll offer to keep AUM up and their fees at the highest possible level.. At least this is what I expect. Question for Bond holders and preferred stockholders is whether they'll come a time when they can not be able to sell shares above the net asset value as I believe is required by the rules. That's why I bought the preferred maturing in 2024.
@rtblew Sort of ... I believe most of that 27 million is not actually from the ATM. It is from the majority of shareholder taking their distribution in shares rather than in cash. Preferred is safe and nice. But it doesn't pay the 20% return ...
Ì just want this to go back to 6....even 5.70 I'll take from up 8% to down 8%. I've noticed with all closed end funds a straight downward trajectory..starting to think all cefs are garbage...clo related or not
CompoundingDollaz profile picture
Financial update just released this morning:

manaman profile picture
@Affinity4Investing Thanks for posting this.

OXLC is issuing more common stock?

I am happy that so many people continue to buy the common, as the money then can be used to cover the dividend of the notes and the preferreds.
BartAtTheRanch profile picture

Sounds like the definition of a "Ponzi scheme"?

CompoundingDollaz profile picture
@BartAtTheRanch An absolute Amen! to that bruv...
analystmjh profile picture
The manager of this fund abruptly stepped down last month, Debdeep Maji. He was absent from the latest earnings call but not a single analyst brought it up. I have not seen any comment on this. In fact, the fund is trading at a 20% to its NAV today. Shareholders seem largely oblivious.
CompoundingDollaz profile picture
@analystmjh Was he from Oxford Funds (the managing overlord) or from OXLC? Haven't found where this was written up, yet.
analystmjh profile picture
@Affinity4Investing Yes, he was the portfolio manager at Oxford Funds, directing the investments of all of their products. I reached out directly to him, he confirmed his departure and refuses to elaborate further...!
CompoundingDollaz profile picture
@analystmjh Couldn't find jack about this on the punk Oxfordfunds.com website. They don't post news, it appears. Yet another red flag, IMO. Lots of pretty pictures of their staff, like that makes a difference to anyone other than them.
Could you compare ECC with OXLC
@Marcos1963 yes, they are very comparable.
CompoundingDollaz profile picture
@Marcos1963 Respectfully, they both suck - all in my opinion - yet based on the numbers I evaluate.

OXLC's NAV since 2011 was recently down ~76%. ECC's NAV since 2014 has sunk ~42%.

Both were positively impacted by Covid as it allowed them to butcher their dividends to rates that they are still nowhere back to paying, relatively speaking. Covid gave them such a breath of fresh air to continue running the game. OXLC also had one other dividend slashing besides the one in 2020.

Both are serial common share issuers at lower and lower NAV's.

Speaking to preferred's and baby bonds, OXLCM hasn't been redeemed yet (it's several years past 1st call) but they will be forced to redeem it next year. OXLCP hits first call in a few weeks and they won't be redeeming that either. Three other issues hit 1st call next year. And in the meantime, the common is running them around at a divvy of ~15% a year.

How much longer can this music keep playing?
Oxford Lane Capital (NASDAQ:OXLC) on Monday estimated its net asset value to be $5.02-$5.12 per share as of Jan, 31, 2023, up from $4.63 at the end of 2022
Xxfactor profile picture
Oxlc has a 10% expense fee. That seems awfully high
Ryan Bowen profile picture
@Xxfactor awfully high for a good fund. What kind of qualifier do we need for a fund that has a long-term history of destroying capital charging this fee?
@Xxfactor , This is not a problem. It depends what the fees are for. At least 4% of that 10% pays for the interest on the leverage. That is just an expense for our benefit - that gets listed as a "fee" because the CEF "fee" definition is stupid (in this case).
I've seen this discussion before, but I'm not swayed by the argument that the notes are safer than 2024 preferred for a simple reason. With the 2024 preferred the company only has to survive and be able to pay out the preferred until June 2024. That's not a problem if you can issue common stock at any time above the asset value which is almost always the case or wind down positions for cash. The capital losses do not occur that quickly that it would leave nothing to pay out the preferred in 2024. With the notes, the company has to make it to 2030. Big difference in time given the rate of asset decline.
NV_GARY profile picture
1) Are they able to issue above NAV? It looks like ATM offerings are used.
2) Ok until they suspend the preferred-- then just hang on.
@NV_GARY Market and ATM prices are consistently above nav, and they keep offering stock successfully.
Ryan Bowen profile picture
@rtblew definitely reasonable. Although if one is worried about survival of the company at all then perhaps none of these are a good investment.
edaskew profile picture
There's current yield, and then there is the yield to maturity. If you go for the ones with a higher current yield, often the YTM is lower.
Ryan Bowen profile picture
@edaskew definitely something to keep in mind when making an investment choice here, thanks for adding.
Have small positions in OXLC-L, OXLC-M and OXLC-N but not OXLC common stock - I'm OK with lower yield but better sleep. Will check out your article on ACR preferreds
Ryan Bowen profile picture
@Divydripper thanks for checking this out. Hopefully the other article is helpful for you too.
CompoundingDollaz profile picture
From today:

Net asset value (“NAV”) per share as of December 31, 2022 stood at $4.63, compared with a NAV per share on September 30, 2022 of $4.93.

So this means that the NAV is down over 33% from a year ago.
The following is from another analyst's report:
Net Asset Value fluctuates with the estimates of the CLO values; however,
each CLO will receive full value at maturity so NAV isn't very important.
Disclosure: I do not own OXLC
Smarty_Pants profile picture

Thanks for posting this. The value of a loan varies inversely with changes in interest rates. If OXLC holds their CLOs to maturity they get paid full value regardless of the ever-changing NAV discount(s) they experience before that point in time.

The FED dropped rates to 0.25% in 2020. In March of 2022 the FED began raising rates again. Today that rate is 4.5%. The Present Value of any loan changes with the current interest rates. Rates go up, the Present Value of a loan goes down. Rates go down, the Present Value of a loan goes up.

You can see this effect in the price of the TLT ETF (20 Year Treasury Bond ETF). The price of TLT has dropped from $170 in 2020 to $106 today, which is a reasonable reflection of the NAV for TLT. Yet nobody is panicking over the 37% 'plunge' in NAV for TLT like they are for the drop in NAV for OXLC despite both drops being caused by the same effect.


If the FED ever starts lowering rates again, the NAV of OXLC will begin to increase again, and they'll STILL collect full value at maturity.

Default rates are something to keep an eye on. That's the risk to be monitored. Collecting nothing at maturity will leave a mark.

Long a few hundred shares of OXLC from $5.06 and dripping. Up nearly 15% at today's prices, plus a 17.7% yield. I've had more than one investment do a lot worse than OXLC. I'm happy to keep a watchful eye on their business performance, for now.
CompoundingDollaz profile picture
@retiredrhb Not buying it. Look at the trainwreck since 2011. NAV trendline down, down, down. That is not fluctuation (down ~70% IIRC). That is unsustainable, IMO. I owned OXLCP for awhile, but see no need to continue gambling. Way too many credible IG offerings to get in that allow one to SWAN. These guys slashed their dividends twice in what, 5 years and today's dividend in still substantially down from where it was prior to the last cut in 2020.
manaman profile picture
Why did the author not mention the 200% protection for the preferreds and the 300% protection for the notes?
Ryan Bowen profile picture
@manaman I knew I forgot something!
NV_GARY profile picture
@Ryan Bowen
-And-- "That helps investors have a bit more certainty in estimating yield-to-maturity."
Should have included the YTMs.
I prefer the OXLCL note. Preferreds can be suspended- doing that with a note would be disaster- bankruptcy imminent.
Treading Softly profile picture
@Ryan Bowen " And of particular note both ACR preferreds are key holdings of OXLC peer Eagle Credit Company" - you may want to correct this.
ACR and its preferreds are held by $ECC's parent company and manager who has a privately run fund for high net-worth individuals. This same fund also heavily invested in OXLC during the 2020 downturn and sold out at a hefty profit.

Ryan Bowen profile picture
@Treading Softly good clarification here as my description isn't quite accurate. Thanks for chiming in and helping ensure we're accurate on the details here!
Based on the data in your table it appears you are spending $1.48 over the cost of OXLCO to buy OXLCN in order to get $.28/yr in dividend. It will take several years to break even
Ryan Bowen profile picture
Fortunately there are years until maturity! My point here is that despite trading pari-passu they are offering much different yields.
Every firm has boilerplate legalese to attempt to protect them from lawsuits. I don't necessarily disagree with your wariness, though. I do feel like a lot of the downside has already occurred. Only have a smallish position but I intend to up my stake in the basic stock at some point.
Thanks for article.
Ryan Bowen profile picture
@Seeburto a lot of downside has indeed occurred at this point. My wariness is whether a looming recession might accelerate further downside -- if it doesn't though bulls will have a way to run. Good luck!
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