SCHEDULE: Dondero & Affiliates Boost Highland Fund Stake to 6.3%

James D. Dondero and affiliated entities have increased their beneficial ownership in Highland Opportunities & Income Fund, reporting recent open market purchases.

Summary

• This Amendment No. 1 updates the Schedule 13D filed on September 22, 2025, for Highland Opportunities & Income Fund.
• The Reporting Persons include James D. Dondero, Highland Global Allocation Fund (GAF), Drugcrafters, L.P., NexPoint Asset Management, L.P., and Nancy Marie Dondero.
• Since the last Schedule 13D filing, Highland Global Allocation Fund (GAF) purchased an additional 621,484 Common Shares in open market transactions.
• The aggregate purchase price for GAF's recent acquisitions totaled $4,090,440, funded by working capital.
• As of October 7, 2025, James D. Dondero beneficially owns 3,499,031.37 Common Shares, representing approximately 6.3% of the outstanding shares.
• Other beneficial ownerships include Drugcrafters, L.P. (72,082 shares, 0.1%), Highland Global Allocation Fund (1,427,678 shares, 2.6%), NexPoint Asset Management, L.P. (1,427,678 shares, 2.6%), and Nancy Marie Dondero (1,997,527.92 shares, 3.6%).
• James D. Dondero holds sole voting and dispositive power over 1,743.45 Common Shares and shared voting and dispositive power over 3,497,287.92 Common Shares.

Sentiment

Score: 6

Explanation: The filing reports an increase in beneficial ownership by a significant investor group, including open market purchases, which is generally a positive signal of confidence. However, it is purely an ownership update and does not contain performance or operational data to warrant a higher score.

Positives

• Reporting Persons, particularly Highland Global Allocation Fund (GAF), increased their stake in Highland Opportunities & Income Fund through open market purchases totaling 621,484 Common Shares.
• The aggregate purchase price of $4,090,440 for GAF's recent acquisitions indicates a significant investment.
• James D. Dondero and affiliated entities collectively hold a substantial beneficial ownership of 6.3% of the outstanding Common Shares, signaling confidence in the Issuer.

Negatives

• No explicit negatives are mentioned in this ownership disclosure filing.

Risks

• No specific risks related to the Issuer's operations or financial health are detailed in this ownership filing.

Future Outlook

No forward-looking statements or guidance regarding the Issuer's future performance or strategic direction are provided in this ownership filing.

Industry Context

This filing reflects an update in beneficial ownership by a significant investor group in a publicly traded fund. Such disclosures are routine in the investment management industry, indicating adjustments in portfolio holdings or strategic positioning by large shareholders. The increase in stake by James D. Dondero and affiliated entities suggests a continued interest in the Issuer within the broader investment fund landscape.

Comparison to Industry Standards

• This filing is an ownership disclosure and does not contain operational or financial performance metrics suitable for direct comparison to industry standards or specific comparable companies or projects. It focuses solely on the beneficial ownership structure of Highland Opportunities & Income Fund.

Management Changes

Corporate Governance

Legal Proceedings

• No litigation or regulatory matters are disclosed in this filing.

Related Party Transactions

• James D. Dondero, through his control of NexPoint's general partner and ownership in PCMG Trading Partners XXIII, L.P. (which owns Drugcrafters), is deemed an indirect beneficial owner of shares held by NexPoint, Drugcrafters, and Highland Global Allocation Fund (managed by NexPoint).
• Nancy Marie Dondero, sister of James D. Dondero, serves as trustee for a trust that beneficially owns shares, and James D. Dondero has the right to acquire beneficial ownership of these shares.

Stakeholder Impact

• Shareholders: The increased beneficial ownership by James D. Dondero and affiliated entities, now totaling 6.3%, could be perceived as a vote of confidence, potentially influencing market sentiment positively.
• Management: The significant stake held by this investor group may lead to increased engagement or influence on the Issuer's strategic direction.

Next Steps

• No specific future actions, events, or milestones for the Issuer are mentioned in this ownership disclosure filing.

Key Dates

Recommendation

The filing details an increase in beneficial ownership by James D. Dondero and affiliated entities, including significant open market purchases by Highland Global Allocation Fund. This increased stake, now totaling 6.3% for James D. Dondero, signals confidence from a major investor group. While this is generally a positive indicator, the filing does not provide operational or financial performance data to warrant a stronger recommendation. Therefore, a 'hold' recommendation is appropriate, suggesting existing investors maintain their position given the insider confidence, while new investors should await further fundamental insights.

Keywords

Beneficial ownership, Schedule 13D, SEC filing, Highland Opportunities & Income Fund, James D. Dondero, NexPoint Asset Management, Highland Global Allocation Fund, open market purchase, institutional investor, ownership stake