| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 2472998.06 | 10181037 |
| Intrinsic value (DCF) | 8.96 | -63 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Oxford Square Capital Corp. (NASDAQ: OXSQG) is a business development company (BDC) specializing in debt and equity investments in technology-related small and mid-sized enterprises (SMEs). The company primarily targets businesses with annual revenues under $200 million or enterprise values below $300 million, offering flexible capital solutions to fuel growth. Operating in the Financial Services sector, Oxford Square Capital plays a critical role in bridging funding gaps for emerging tech firms, leveraging its expertise in structured finance and credit analysis. With a market capitalization of approximately $167.7 million, the company provides investors exposure to high-growth potential tech SMEs while generating income through its 5.50% Notes due 2028. Oxford Square’s investment strategy focuses on yield generation and capital preservation, making it a niche player in the BDC space with a technology-centric portfolio.
Oxford Square Capital Corp. presents a mixed investment profile. On the positive side, its 5.50% Notes due 2028 offer a fixed-income component with a relatively attractive yield in the current interest rate environment. The company’s focus on technology SMEs provides exposure to high-growth sectors, though this also introduces higher credit risk. Financials show modest net income ($5.88M) but negative revenue, reflecting the BDC’s income recognition structure. With a low beta (0.04), OXSQG exhibits low correlation to broader markets, potentially offering portfolio diversification benefits. However, the high debt-to-equity ratio ($123.6M debt vs. $34.9M cash) and sector concentration in tech SMEs warrant caution. Dividend sustainability should be monitored given the negative operating cash flow after dividends.
Oxford Square Capital occupies a specialized niche within the BDC landscape, differentiating itself through its technology sector focus and SME lending parameters (revenues <$200M/EV <$300M). This positioning allows OXSQG to avoid direct competition with larger BDCs that target middle-market companies, but it also limits deal flow opportunities. The company’s competitive advantage lies in its sector expertise and ability to structure complex financings for tech companies that may not qualify for traditional bank loans. However, its small scale ($167.7M market cap) compared to industry leaders restricts access to larger deals and diversification. OXSQG competes with both tech-focused venture debt funds and generalist BDCs, lacking the scale advantages of the latter. The 5.50% Notes provide a cost-of-capital advantage versus equity-funded BDCs, but the high debt load could constrain flexibility during market downturns. Portfolio concentration in tech (while a differentiator) increases correlation risk versus diversified BDCs.