Oxford Lane Capital: Why I Think This Is A Yield Trap (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Oxford Lane Capital has outperformed the S&P 500 by +1.94% since my last 'Sell' view on this closed-ended fund in February 2024. But I am retaining my stance.
• Distributions continue to be funded by capital raises instead of operational cash flow. I don't see how this is sustainable long term.
• Oxford Lane Capital investments' fair value is below cost, which means the sale of investments would also lead to a loss. This does not help recoup negative operating cash flows.
• The company's net asset value has been falling to stagnant due to these headwinds. Still, OXLC is trading at an 8.8% premium to NAV, making buys less appealing.
• Relative to the S&P 500, my technicals read shows scope for OXLC to underperform, as the ratio prices are currently rejecting off a key monthly resistance level.

Read the full article here.