| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 97.47 | 2021 |
| Intrinsic value (DCF) | 144.37 | 3042 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
OFS Credit Company, Inc. (NASDAQ: OCCI) is a specialty finance company focused on providing customized credit solutions to middle-market companies. Operating as a fund of OFS Advisor, OCCI primarily invests in collateralized loan obligations (CLOs), leveraged loans, and other structured credit products. The company targets risk-adjusted returns by capitalizing on inefficiencies in the credit markets, particularly in the non-investment-grade segment. As part of the broader financial services sector, OCCI plays a critical role in providing liquidity to mid-sized businesses, which often face challenges accessing traditional bank financing. With a market capitalization of approximately $140 million, the company serves institutional and retail investors seeking exposure to alternative credit strategies. OCCI’s disciplined investment approach and affiliation with OFS Advisor position it as a niche player in the asset management industry, offering differentiated yield opportunities in a low-interest-rate environment.
OFS Credit Company presents an intriguing investment case for income-focused investors, given its dividend yield of approximately 9.7% (based on a $1.36 annual dividend and recent share price). The company’s net income of $15 million and diluted EPS of $0.90 reflect solid profitability, though negative operating cash flow (-$30.6 million) raises liquidity concerns. With no debt and $24.7 million in cash, OCCI maintains a conservative balance sheet, mitigating some risk. However, its small market cap and reliance on CLO markets expose it to credit spread volatility and economic downturns. Investors should weigh the high yield against potential refinancing risks in its underlying assets.
OFS Credit Company competes in a crowded asset management landscape dominated by larger credit-focused funds and BDCs. Its primary competitive advantage lies in its specialized focus on CLO equity and junior debt tranches, a niche that larger players often overlook due to complexity. The affiliation with OFS Advisor provides access to proprietary deal flow and credit analysis capabilities, though this also creates concentration risk. Unlike traditional BDCs (e.g., Ares Capital), OCCI doesn’t originate loans directly, instead acting as a capital provider to CLO structures—a model that offers diversification but less control over underlying assets. The company’s zero-leverage policy differentiates it from leveraged credit funds but may limit return potential. Competitive threats include rising interest rates (pressuring CLO arbitrage economics) and the growing dominance of mega-asset managers in credit markets. OCCI’s sub-$200M AUM makes scalability a challenge compared to peers with institutional distribution networks.