Oxford Square Capital Corp. (OXSQ): BCG Matrix [Dec-2025 Updated]

As we look at Oxford Square Capital Corp. (OXSQ) heading into late 2025, the portfolio shows a classic BDC tension: stable income versus high-stakes growth bets. You've got a solid base in First-Lien Debt making up nearly half the portfolio, but the real story is the 37% chunk tied up in volatile CLO Equity, which recently caused a $7.5$ million hit to unrealized value. We're mapping this out using the BCG Matrix to see exactly where the dependable cash flow is coming from and which high-risk areas, like those $58.1$ million in new investments, need a serious decision-double down or cut bait.

Background of Oxford Square Capital Corp. (OXSQ)

You're looking at Oxford Square Capital Corp. (OXSQ), which operates as a publicly-traded Business Development Company (BDC), meaning it's regulated under the Investment Company Act of 1940. Honestly, their main goal is to maximize the portfolio's total return by focusing on risk-adjusted returns. They do this by primarily investing in corporate debt securities and Collateralized Loan Obligation (CLO) structured finance investments that hold those debt securities. Oxford Square Capital Corp. is based in Greenwich, Connecticut.

To be clear about the risk profile, the debt securities Oxford Square Capital Corp. holds are generally from companies considered below investment grade, which is why you often hear their debt referred to as 'junk.' Their investment activities are managed by Oxford Square Management, LLC. They also have the flexibility to invest in publicly traded debt and/or equity securities, and their CLO investments can sometimes include warehouse facilities, which are early-stage structures meant to aggregate loans for a future CLO vehicle.

Looking at the portfolio as of the end of Q2 2025, the total fair value of their investments stood at about $241.5 million spread across 61 different positions. That portfolio was heavily weighted toward secured debt at approximately 61%-split between 48% in first-lien and 13% in second-lien debt. The next largest segment was CLO equity, making up 37% of the portfolio, with the remaining 2% in equity or other investments. That's a pretty concentrated view of their assets.

For the most recent quarter ending September 30, 2025 (Q3 2025), Oxford Square Capital Corp. reported total investment income of $10.2 million, which was an uptick from the $9.5 million seen in the prior quarter. Net investment income (NII) for Q3 2025 came in at $5.6 million, translating to $0.07 per share. Still, the net asset value (NAV) per share saw a dip to $1.95 from $2.06 at the end of Q2 2025, largely because the company recorded combined net unrealized and realized losses totaling $7.5 million during the quarter. They also have notes outstanding, like the 7.75% unsecured notes maturing in July 2030.

Oxford Square Capital Corp. (OXSQ) - BCG Matrix: Stars

You're looking at the areas where Oxford Square Capital Corp. is aggressively deploying capital, betting on high future returns, which fits the Star profile perfectly. These are the segments where the company is trying to build market leadership, even if it means consuming significant resources now.

The focus on CLO Warehouse Facilities definitely falls into this high-growth, high-risk category for a Business Development Company (BDC) like Oxford Square Capital Corp. These facilities are financing structures designed to gather the underlying loans needed to eventually form a new Collateralized Loan Obligation (CLO) vehicle. The very nature of funding an early-stage vehicle suggests a market that is growing, but one where success isn't guaranteed.

The commitment to growth is clear in the investment deployment figures for the third quarter of 2025. Oxford Square Capital Corp. recorded purchases of approximately $58.1 million in new investments during Q3 2025. This was the highest quarterly investment activity in the periods presented, especially when compared to the $0 in new investments reported in Q2 2025. With sales and repayments of approximately $31.3 million, the resulting net investment activity was a positive $26.9 million.

To support this growth push, Oxford Square Capital Corp. is strategically increasing its leverage, which is a classic high-growth strategy for a BDC. Management explicitly noted that the portfolio was running relatively lightly levered compared to its statutory limitation, suggesting potential for further deployment. The debt-to-equity ratio moved from 0.73x in the prior quarter up to 0.98x as of September 30, 2025. This repositioning involved issuing approximately $74.8 million of 7.75% unsecured notes due July 2030, while simultaneously repaying $34.8 million of 6.25% unsecured notes due April 2026. The goal here is definitely to enhance Net Investment Income (NII) per share, though the Q3 2025 NII per share was $0.07, which was down from $0.08 in Q2 2025.

The focus on CLO equity tranches represents the search for those outsized returns in a market that, while volatile, offers high growth potential for the equity piece of the structure. As of September 30, 2025, CLO Equity made up 43.5% of Oxford Square Capital Corp.'s total invested portfolio fair value. The weighted average effective yield on these CLO equity investments was 9.7% at current cost as of the end of Q3 2025. For that quarter, income from CLO equity investments specifically amounted to $4.3 million of the total investment income.

Here's a snapshot of the asset allocation supporting this Star focus as of the end of Q3 2025:

The company's investment strategy is clearly weighted toward these equity-like, higher-growth assets, which is what you expect from a Star in a BCG framework. You're watching for these investments to mature and stabilize so they can transition into Cash Cows when the market growth rate naturally slows.

Oxford Square Capital Corp. (OXSQ) - BCG Matrix: Cash Cows

You're looking at the core engine of Oxford Square Capital Corp. (OXSQ), the part of the business that reliably churns out the cash needed to fund everything else. In the BCG framework, these are the high-market-share assets operating in a mature, low-growth segment. For Oxford Square Capital Corp., this stability is rooted deeply in its debt-focused portfolio.

The foundation of this cash generation is the First-Lien Secured Debt, which makes up the largest, most stable portion of the portfolio at approximately 48% of total fair value. This concentration in senior secured assets provides a predictable income stream, which is exactly what you want from a Cash Cow. This segment is the workhorse.

Here's a look at the financial performance supporting this Cash Cow status for the quarter ended September 30, 2025:

The overall Debt Investments segment generated a stable $5.2 million in investment income in Q3 2025. This income stream is bolstered by a high weighted average yield on debt investments at 14.6%, providing a consistent, high-margin income stream in what is considered a low-growth market for these assets. This high yield is key to maintaining profitability without needing aggressive market share expansion.

This reliable income directly supports shareholder returns. Oxford Square Capital Corp.'s long-standing, consistent monthly distribution of $0.035 per share is supported by this stable debt income. While the Net Investment Income (NII) per share of $0.07 for the quarter did not fully cover the total distributions of $0.105 per share for that period, the high-yielding debt component is the primary source Oxford Square Capital Corp. relies on to maintain this payout policy.

You can see the stability in the asset class composition:

• First-Lien Secured Debt: Largest portion, approximately 48% of total fair value.
• Debt Investments Income: Stable $5.2 million in Q3 2025.
• Debt Yield: High weighted average of 14.6%.
• Shareholder Return: Monthly dividend maintained at $0.035 per share.

Companies like Oxford Square Capital Corp. are advised to invest in these units to maintain current productivity or simply 'milk' the gains passively. The focus here is on efficiency improvements, perhaps through infrastructure supporting the debt servicing, rather than large-scale promotional spending.

Oxford Square Capital Corp. (OXSQ) - BCG Matrix: Dogs

You're looking at the parts of Oxford Square Capital Corp. (OXSQ) that aren't driving growth or generating significant cash right now. These are the Dog assets-low market share in a low-growth area, honestly. We need to be clear-eyed about where capital is getting stuck, so let's look at the specifics as of the end of Q3 2025.

One clear indicator of this category is the preferred equity investments that have moved to non-accrual status. As of September 30, 2025, these positions, which aren't currently paying interest or dividends, had an aggregate fair value of approximately $4.9 million. These are units where the expected return is highly uncertain, fitting the Dog profile perfectly.

Also in this group are other small equity investments. These are non-core to the primary income strategy and represent a minor slice of the overall pie. Specifically, these other investments make up about 2% of the total portfolio fair value as of September 30, 2025. You can see the key metrics associated with these drag elements here:

These underperformers are consuming capital without sufficient return. For instance, assets experiencing net realized losses totaled approximately $153,000 in Q3 2025. That's money coming out of the business due to selling an asset for less than its cost basis, which is exactly what you expect from a Dog that needs to be divested.

The cumulative effect of these non-performing areas, alongside unrealized depreciation, is what drives the overall negative result. Any legacy investments that aren't performing contributed to the overall net decrease in net assets of approximately $2.1 million in Q3 2025. This decrease was composed of the net realized losses of about $153,000 and a much larger net unrealized depreciation of approximately $7.5 million for the quarter. These units are prime candidates for divestiture to free up capital. Finance: draft a list of the $4.9 million in non-accrual preferred equity tranches for review by next Wednesday.

Oxford Square Capital Corp. (OXSQ) - BCG Matrix: Question Marks

You're looking at the segment of Oxford Square Capital Corp. (OXSQ) that demands the most strategic attention right now, the Question Marks. These are areas with high potential growth but currently low market penetration, meaning they consume cash while waiting for that breakout moment.

The primary component fitting this profile is the Collateralized Loan Obligation (CLO) Equity Investments segment. This is a major piece of the puzzle, representing approximately 37% of the total portfolio. While this segment is high-income, generating about $4.3 million in Q3 2025, its capital volatility is what lands it in this quadrant. It's a high-stakes play, honestly.

The pressure on the balance sheet is clear from the recent marks. The CLO equity portfolio was the primary driver behind the $7.5 million in net unrealized depreciation recorded in Q3 2025. This valuation hit is what erodes the Net Asset Value (NAV) you're tracking. Here's a quick look at the key capital metrics from that quarter:

That declining NAV per share, falling from $2.06 to $1.95 in Q3 2025, definitely signals a capital drain that requires a firm decision: either you pour more capital in to secure market share, or you cut the cord.

To try and signal confidence and support the stock price-a key management focus-the Board authorized a significant capital-intensive action: a $25 million share repurchase program over the next 12 months. This move is management saying they believe the underlying value, despite the current marks, is worth defending.

The underlying yields show why they are sticking with it, even with the depreciation hits. You can see the income potential here:

• Debt Investment Yield: 14.6%
• CLO Equity Effective Yield: 9.7%

However, the cash flow picture isn't perfectly clean yet. The NII per share was $0.07, but the total distributions declared for the first quarter of 2026 were $0.035 per month, totaling $0.105 per share for the quarter. That gap between NII and distributions is the cash burn you need to watch closely. If onboarding takes 14+ days longer than expected to turn these investments into realized income, that coverage shortfall definitely rises.

Finance: draft 13-week cash view by Friday.