OXSQ

Oxford Square is a closed-end BDC/RIC investing in corporate debt and, notably, CLO debt and equity — and the filing is explicit that 'substantially all of our fair valued investments are measured based upon Level 3 inputs,' i.e. illiquid holdings the Board marks each quarter using models, not market prices. That opacity is the whole risk: FY2025 net income swung to -$18.7M (YoY -418.6%) from +$5.88M, and for a BDC that loss is driven overwhelmingly by net change in unrealized depreciation on those Level 3 marks. History confirms this is a mark-to-model rollercoaster, not a steady compounder: net income has gone +$39.6M, -$85.6M, +$17.2M, +$5.88M, -$18.7M across FY21-25. ROE is -12.9%.

The deeper problem is the distribution math. OXSQ paid $31.3M in dividends in FY2025 (up 21.6%) against negative net income and negative operating cash flow of -$13.7M — the payout is being funded by returning capital, not earning it, which is confirmed by the accumulated deficit deepening to -$378M (YoY -15.4%). To keep the machine running, management issued stock: shares outstanding jumped 25.4% to 87.5M, and stockholders' equity still fell 9.5% to $145M. That combination — over-distributing while diluting below intrinsic value — is a classic NAV melt: book value per share is roughly $1.66 ($145M / 87.5M), so at $1.33 the stock trades near a 20% discount to a NAV that is itself shrinking each year.