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16% Yield From A Great Financial Crisis Tested Asset Class, By Oxford Lane

Published Sat, 13 Apr 2019 15:10:00 -0400 on Seeking Alpha

Co-produced with Treading Softly and PendragonY for High Dividend Opportunities
Investment Thesis
This is article 2/4 on a series of report we are currently working on the topic of our investors can boost their income by investing in Collateralized Loan Obligations, or CLOs. The first report was an introduction to CLOs, entitled: "How To Boost Your Income With CLOs."
Oxford Lane Capital (OXLC) is a high-yielding, immediate income-style stock. Investors should look to OXLC for income generation but limited capital appreciation. The focus of CLOs is high income generation - perfect to fire up a portfolio's yield when mixed with more conservative investments.
OXLC's CLO Investments
OXLC focuses on growth and steady income via CLOs. It is invested in 80 different CLOs, of which in 77 it holds an equity position. This provides OXLC a high rate of income, which it readily distributes back to shareholders.

(Source: OXLC Earnings Slides)
These various CLOs provide OXLC with a vast and diversified borrower base. This means that as one of its 1568 borrows collapses, only 0.79% of the total portfolio is at risk in the worst-case scenario, and on average only 0.06% is at risk should this happen. This wide-scale diversity adds a measure of safety amongst OXLC's higher-risk focus.
What About the NAV Premiums?
CEF investors often look to the fund's NAV to be discount (which is the norm) versus premium to determine entry points. For CLO funds, this... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
EAGLE POINT CREDIT 17.01   0.0 -2.29 2.40 14.07
SARATOGA INVESTMENT 25.11   10.3 2.44 2.16 8.70


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