SCHEDULE: Eagle Point Boosts Oxford Lane Preferred Stake

Eagle Point Credit Management and Thomas Philip Majewski have increased their beneficial ownership in Oxford Lane Capital Corp.'s Preferred Shares to 21.75%.

Summary

• Eagle Point Credit Management LLC (EPCM) and Thomas Philip Majewski (the "Reporting Persons") have filed an Amendment No. 2 to their Schedule 13D regarding their beneficial ownership of Preferred Shares in Oxford Lane Capital Corp.
• EPCM beneficially owns 1,900,338 Preferred Shares, representing approximately 21.69% of the class, with sole voting and dispositive power.
• Thomas Philip Majewski beneficially owns 1,905,838 Preferred Shares, representing approximately 21.75% of the class, including shared voting and dispositive power through his role as managing partner and portfolio manager for EPCM.
• The Preferred Shares were acquired over time in multiple secondary transactions at various market prices, funded by each applicable Account's available investment capital.
• The purpose of the acquisition is for investment, and the Reporting Persons reserve the right to increase or decrease their ownership over time.

Sentiment

Score: 7

Explanation: The filing indicates a continued significant investment by a specialized credit manager in Oxford Lane Capital Corp.'s preferred shares. While there's active trading (both buying and selling), the overall beneficial ownership remains high, suggesting confidence in the issuer's preferred stock as an investment vehicle. The lack of negative disclosures (legal issues, etc.) further supports a moderately positive view from the perspective of the reporting entity's investment.

Positives

• The continued significant beneficial ownership by Eagle Point Credit Management LLC and its managing partner indicates ongoing institutional confidence in Oxford Lane Capital Corp.'s preferred shares as an investment.
• Acquisitions were financed through available investment capital, suggesting a disciplined approach without reliance on external financing for these specific purchases.

Negatives

• The detailed transaction history reveals numerous sales of preferred shares alongside purchases, indicating active trading and potential rebalancing rather than a pure accumulation strategy, which could suggest a lack of strong conviction for a sustained, long-term hold at current levels.
• The net change in beneficial ownership percentage, while an increase, is relatively modest given the volume of transactions, implying an opportunistic trading or portfolio management strategy rather than a significant new strategic investment.

Risks

• The Reporting Persons explicitly reserve the right to increase or decrease their ownership of Preferred Shares over time, which could lead to future sales that may exert downward pressure on the preferred share price.
• The stated purpose of the investment is broad ("investment purposes"), which does not commit the Reporting Persons to a specific long-term holding period or strategic intent beyond seeking financial returns.

Future Outlook

The Reporting Persons acquired the Preferred Shares for investment purposes and will continue to analyze these investments on an ongoing basis, reserving the right to increase or decrease their ownership over time.

Management Comments

• EPCM caused the Accounts to acquire the Preferred Shares they hold for investment purposes and will continue to analyze such investments on an ongoing basis.
• EPCM, on behalf of the Accounts, reserves the right to increase or decrease the Accounts' ownership of the Preferred Shares over time.

Industry Context

This filing reflects an institutional investor's active management of its preferred share holdings in a Business Development Company (BDC) like Oxford Lane Capital Corp. BDCs often issue preferred shares to raise capital, and these shares are typically sought by income-focused investors. Eagle Point Credit Management specializes in credit investments, including CLOs and other structured credit, making preferred shares a relevant asset class for their managed accounts. The active trading suggests a dynamic approach to managing yield and capital appreciation within their portfolio.

Comparison to Industry Standards

• The beneficial ownership of 21.75% by Eagle Point Credit Management and its managing partner represents a significant stake in Oxford Lane Capital Corp.'s preferred shares, indicating a high level of conviction or strategic interest in this specific asset class.
• This level of ownership is substantial for an institutional investor in a publicly traded company's preferred stock, often signaling a long-term interest or a desire to influence certain aspects, although no such intent is explicitly stated in this filing.
• Compared to typical passive institutional holdings, this percentage is notably high, suggesting a more active management approach to this specific position within their portfolio.
• The continuous buying and selling activity across different series of preferred shares (7.125% Series 2029, 6.00% Series 2029, Series 2027) at varying prices reflects a sophisticated trading strategy, likely aimed at optimizing yield, managing duration, or capitalizing on market inefficiencies within the preferred stock market, rather than a simple buy-and-hold strategy.

Legal Proceedings

• None of the Disclosed Parties (Eagle Point Credit Management LLC, Thomas Philip Majewski, or related entities/individuals) have been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) in the past five years.
• None of the Disclosed Parties were party to a civil proceeding of a judicial or administrative body of competent jurisdiction that resulted in a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws in the past five years.

Related Party Transactions

• Eagle Point Credit Management LLC and Thomas Philip Majewski are joint filers, with Mr. Majewski having shared voting and dispositive power due to his role as managing partner and portfolio manager for EPCM.
• EPCM is ultimately wholly owned by Eagle Point Holdings LP through intermediary holding companies.
• Eagle Point Holdings GP LLC is the sole general partner of EP Holdings, managed by a board whose majority members are appointed by Trident EP-II Holdings LLC, which also owns a majority of voting interests in EP Holdings GP.

Stakeholder Impact

• Shareholders of Oxford Lane Capital Corp. may view the continued significant beneficial ownership by a specialized institutional investor positively, as it indicates ongoing institutional confidence in the preferred shares.
• Investors in Eagle Point Credit Management's Accounts receive transparency on how their capital is being deployed in Oxford Lane Capital Corp. preferred shares, consistent with an investment strategy focused on credit assets.

Next Steps

• Reporting Persons will continue to analyze their investments in Oxford Lane Capital Corp. preferred shares.
• Reporting Persons reserve the right to increase or decrease their ownership of the Preferred Shares over time.

Key Dates

Recommendation

The filing indicates a significant, but actively managed, stake in Oxford Lane Capital Corp.'s preferred shares by a sophisticated institutional investor. While the high percentage of ownership suggests a degree of confidence, the detailed transaction history shows both purchases and sales, indicating a dynamic trading strategy rather than a strong directional bet. This implies the investor is managing their position opportunistically based on market conditions and yield considerations. For other investors, this suggests that the preferred shares are a viable income-generating asset, but the active trading by a major holder implies that significant price appreciation is not necessarily expected, and the position is subject to ongoing re-evaluation. Therefore, a "hold" recommendation is appropriate for existing investors, while new investors should carefully consider their own yield and risk objectives given the active management by a large holder.

Keywords

Oxford Lane Capital Corp, Preferred Shares, Eagle Point Credit Management, Thomas Philip Majewski, Schedule 13D, Beneficial Ownership, Investment Adviser, SEC Filing, Fixed Income, Corporate Debt