OCCI - Oxford Lane Capital: Core NII Easily Supports 19% Yield
2024-04-29 00:16:09 ET
Summary
- Oxford Lane Capital offers a high-yield distribution of 19%, which is well covered by core net investment income.
- OXLC's NAV is challenging to estimate due to the difficulty in quantifying variables that affect CLO pricing.
- The Fund's premium to NAV is currently low at 1.6%, making it an attractive investment for income investors.
Successful investing is about managing risk, not avoiding it.
Benjamin Graham
Let's talk about the elephant in the room. While many income investors seek a relatively safe source of income and wish to preserve capital in doing so, there are many assumed risks associated with CEFs that offer a high yield distribution. For example, several SA analysts who have reviewed Oxford Lane Capital ( OXLC ) in recent months have concluded that the current distribution yield of 19% represents extreme risk, and they suggest staying far away or selling. My analysis suggests a different recommendation, and that is to buy shares of OXLC now for the income while the premium remains low and the distribution yield, which is well covered by core net investment income, remains high....
Oxford Lane Capital: Core NII Easily Supports 19% Yield