OCSL Stock Recent News

Oaktree Specialty Lending (OCSL) is downgraded to a sell due to weak distribution coverage and rising non-accrual rates, indicating a potential dividend cut. Despite a solid portfolio strategy, OCSL's net investment income and NAV have declined, with a YTD total return of negative 12.5%. Management has waived their fee in an effort to soften the negative impact of net investment income. However, this is not a sustainable long term practice.

Oaktree Specialty Lending: Excess Software Lending May Compound 'Value Trap' Risk

Oaktree Specialty Lending Corporation's credit profile deteriorated, leading to risks to the dividend. The company barely covered its dividend with net investment income, leading to a potential dividend cut for passive income investors. Oaktree Specialty Lending's net asset value decreased, causing concern about the sustainability of the dividend.

Although the revenue and EPS for Oaktree Specialty Lending (OCSL) give a sense of how its business performed in the quarter ended March 2024, it might be worth considering how some key metrics compare with Wall Street estimates and the year-ago numbers.

Oaktree Specialty Lending Corp. reported a solid quarter with a 3.2% total NAV return and a flat adjusted net income. Non-accruals fell due to a couple of favorable resolutions; however, it was another quarter of net realized losses. The company's valuation is fairly-valued at the moment and we would look to add the stock at a discount of 3-5% to the sector average valuation.

Ares Capital Corp. and Sixth Street Specialty Lending Inc. held onto the highest debt ratings among the 21 business development companies covered by Fitch Ratings, amid expectations that the sector will face economic headwinds in 2024, but with no major impact to their balance sheets.

Oaktree Specialty Lending Corporation has an 86% Senior Secured Lending focus. The company had an 89% dividend pay-out ratio in the last quarter, suggesting the dividend is well-covered. While the stock is not selling at a discount to NAV, it remains a solid hold for passive income investors.

Business Development Companies are an important part of the U.S. financial system, providing loans to private companies and offering high yields to investors. TriplePoint Venture Growth is a small BDC with a focus on venture lending, offering high yields but with higher risks due to problematic loans. Hercules Capital is a unique and well-performing BDC with exceptional underwriting and a strong track record, making it a good investment option.

Oaktree Specialty Corporation could benefit from lower funding rates in the coming quarters. The fund's emphasis on secular industries will likely sustain investment premiums, lending an opportunity for arbitrage if funding rates taper. Higher cash-based yields have occurred in recent quarters. Moreover, we believe lower nominal yields will mark up Oaktree's asset base, in turn realigning its NAVPS.

11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time         LOS ANGELES, CA, Oct. 05, 2023 (GLOBE NEWSWIRE) -- Oaktree Specialty Lending Corporation (NASDAQ:OCSL) (“Oaktree Specialty Lending” or the “Company”) today announced that it will report its financial results for the fourth fiscal quarter and full year ended September 30, 2023 before the opening of the Nasdaq Global Select Market on Tuesday, November 14, 2023.