Oxford Square Capital (US:OXSQ)2024-11-06 22:34Investment Portfolio - As of September 30, 2024, the fair value of the Company's investment portfolio was approximately $262.9 million[193]. - As of September 30, 2024, the total fair value of the investment portfolio was approximately $262.9 million, down from $266.9 million as of December 31, 2023, reflecting a decrease of about 1.5%[204]. - The company had investments in debt securities or loans to 18 portfolio companies, with a fair value of approximately $152.7 million, compared to 19 companies valued at $179.5 million as of December 31, 2023[209][210]. - The company's CLO equity investments increased to approximately $103.5 million as of September 30, 2024, representing 39.3% of the total portfolio, up from $82.2 million (30.8%) at the end of 2023[211]. - The company held qualifying assets that represented 64.1% of total assets as of September 30, 2024, down from 70.6% at the end of 2023[211]. Investment Activity - The Company generally expects to invest between $5 million and $50 million in each portfolio company[186]. - The company purchased approximately $88.7 million in portfolio investments during the nine months ended September 30, 2024, compared to $11.7 million in the same period of 2023, indicating a significant increase in investment activity[206]. - During the nine months ended September 30, 2024, the company experienced net realized losses of approximately $51.4 million and debt repayments of approximately $61.6 million[204][208]. - The company had loan principal repayments of approximately $61.6 million during the nine months ended September 30, 2024, compared to $15.8 million in the same period of 2023, indicating increased repayment activity[208]. Financial Performance - Investment income for the three months ended September 30, 2024, was approximately $10.3 million, a decrease of 20.8% compared to $13.0 million for the same period in 2023[217]. - Total investment income for the nine months ended September 30, 2024, was approximately $32.5 million, down 17.7% from $39.5 million in 2023[219]. - The net change in unrealized appreciation on investments was approximately $33.6 million for the nine months ended September 30, 2024, compared to $7.1 million in the same period of 2023[206]. - For the three months ended September 30, 2024, the company recognized net realized losses on investments of approximately $12.9 million, primarily due to the extinguishment of two senior secured loans in a single portfolio company[235]. - The net increase in net assets resulting from operations for the three months ended September 30, 2024, was approximately $0.9 million, compared to a net increase of approximately $6.7 million for the same period in 2023[242]. Debt Investments - The weighted average annualized yield on debt investments was approximately 14.50% as of September 30, 2024[187]. - The debt investments had stated interest rates ranging from 8.71% to 13.26% with maturity dates between 0 and 76 months[187]. - The weighted average yield on debt investments increased to approximately 14.50% as of September 30, 2024, compared to approximately 13.10% as of September 30, 2023[220]. - The weighted average stated interest rate on all of the company's debt outstanding as of September 30, 2024, was 5.77%[252]. Expenses and Distributions - Total expenses for the three months ended September 30, 2024, were approximately $4.2 million, a decrease of 36.4% from $6.6 million in 2023[222]. - Interest expense for the three months ended September 30, 2024, was approximately $2.0 million, down from $2.5 million in the same period of 2023[226]. - Professional fees for the three months ended September 30, 2024, were approximately $359,000, compared to approximately $479,000 for the same period in 2023[227]. - General and administrative expenses for the three months ended September 30, 2024, were approximately $395,000, a decrease from approximately $458,000 in 2023[229]. - The company declared a total of $0.225 per share in distributions for the third quarter of 2023, with a GAAP net investment income of $0.11[260]. - The total distributions for the fourth quarter of 2023 are $0.105 per share, with a GAAP net investment income of $0.13, indicating a shortfall of $0.03[259]. Risk Management - The Company is exposed to leverage risks due to borrowing funds for investments, which may magnify potential gains and losses[189]. - Interest rate risk affects the company's net interest income, which is the difference between interest income earned and interest expense incurred[274]. - The company may hedge against interest rate fluctuations using standard instruments like futures, options, and forward contracts[275]. - A hypothetical increase of 300 basis points in interest rates could lead to a 15.2% increase in investment income[277]. - A hypothetical increase of 200 basis points could result in a 10.1% increase in investment income[277]. - A hypothetical increase of 100 basis points could lead to a 5.1% increase in investment income[277]. - Conversely, a hypothetical decrease of 100 basis points could result in a 5.1% decrease in investment income[277]. - The company acknowledges that actual results may differ materially from hypothetical analyses due to various factors[276]. Governance and Compliance - The company has established an Investment Advisory Agreement with Oxford Square Management, which is controlled by Oxford Funds[261]. - Related party transactions are subject to a written policy for allocation of investment opportunities among affiliated entities[267]. - The company has implemented policies to screen transactions for potential conflicts of interest with related parties[268]. - A Code of Business Conduct and Ethics is in place, requiring disclosure of any conflicts of interest by employees and directors[269]. - The Audit Committee is responsible for reviewing and approving transactions with related parties as per NASDAQ corporate governance standards[269].