OCSL Stock Recent News

Currently, an average BDC trades at an 8% discount to NAV. However, those with high dividend cut probabilities have 20%+ discounts. Many of these heavily punished BDCs are busts.

BDCs are exposed to some material headwinds. We can see how already several BDCs have cut their dividends. Theoretically, it might make sense to buy those that have made dividend cuts, which could indicate that the new yields are rather sustainable.

Big dividends sound great, but how about big losses? Since Q2 2025 began, book values got smacked. Not talking about share prices. You can tell if the share price declined (hopefully). That would be a worthless article. One of these high-yield sectors has been doing much better than the others.

Oaktree Specialty Lending trades at a 16% discount to NAV, presenting a potential rebound opportunity if credit performance improves in 2025. The investment firm reset its dividend in the last quarter, cutting the base by 27% and introducing a variable supplementary dividend tied to earnings strength. High non-accrual rates remain a key risk, with OCSL's portfolio quality needing improvement to support a valuation re-rating.

Oaktree Specialty Lending's 13.2% dividend yield is risky due to rising non-accruals and a slowing economy, making another dividend cut likely. Despite a recent dividend cut, OCSL's financials continue to decline, with net asset value dropping significantly and non-performing loans increasing. OCSL's balance sheet is in decent shape with low debt-to-equity and strong liquidity, but this doesn't offset the risks from deteriorating fundamentals.

Oaktree Specialty Lending (OCSL) faces vulnerabilities including weak dividend coverage, portfolio concentration, and negative impacts from tariffs. OCSL's portfolio is heavily concentrated in Software & Services, and rising non-accruals indicate worsening borrower performance, exacerbated by high interest rates. Despite trading at a significant discount to NAV, OCSL's declining NAV and increasing non-accruals suggest ongoing financial instability and potential further downside in 2025.

Oaktree Specialty Lending (OCSL) came out with quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.51 per share. This compares to earnings of $0.56 per share a year ago.

I've been tracking major BDCs for over three years, achieving high total returns and dividends, and outperforming the BDC index. My investments in BDCs are motivated by high yield, diversification from traditional dividend picks, and the potential to outperform in an underexplored market. Yet, there have been many bumps in the process, and some of them quite painful.

Rising non-accrual base is the BDC Achilles heel. The current economic conditions drive up the probability of that risk. Hence, the BDC income and NAV durability have become extremely important topics.

We take a look at the action in business development companies through the second week of April and highlight some of the key themes we are watching. BDCs experienced a 3% decline this week, with volatility at its highest since COVID; traded volumes matched COVID levels. The trade war and market meltdown are causing growth slowdowns and inflation, potentially leading to Fed rate cuts.