OFS Credit Company Inc (OCCI)

Since launching Income Bee in November 2024, we've focused on providing long-term income investment analysis. While some of our picks haven't performed as expected, others have proven resilient during market volatility.

This marks the beginning of a new investment strategy for us. We'll be sharing trade opportunities and signals with our subscribers—focused on preferred stocks, baby bonds, BDCs, and CEFs.

These trades are designed for readers who prefer a more active approach to managing their portfolios. We expect to hold each position for a few weeks to a month. To keep things organized, they’ll be tracked in separate spreadsheets within our tables for easy monitoring.

We will start with: OFS Credit Company Inc (OCCI)

OFS Credit Company Inc (OCCI)

OCCI is closed-end-fund (CEF) that holds primarily in collateralized loan obligation (CLO). The fund is income orientated and generates a 23% dividend yield. The fund invests mainly in CLO equity, which is the riskiest assets with the highest yield.

Usually such CEF’s provide insane dividend yield but their NAV and price decreases over time. We prefer funds who invest in CLO debt like ECC their yield is lower, but NAV is much more stable. Sometimes such funds like OCCI get hammered, and when it happens they provide nice entry points for short term trades. 

Last 4 trading days OCCI price dropped nearly 10%. Many funds CLO trade at premium to their NAV, and this one is not exempt. Now it trades below NAV and with a slight discount of 1.25%.

Compared to the other CLO Closed-End-Funds, only OCCI trades at discount. As we see from the table, many of them trade at an average premium of 5%+. One of the reasons is that investors expect CLO NAV to recover from the recent sell-off in bonds that occurred in the last 2 months. 

We buy OCCI at $6.03 and our expectation is that in the next few weeks its price to recover to a level of $6.50 or higher.