Oxford Square Capital Corp. (OXSQG) might not be a name that sets Wall Street on fire. It's a relatively under-the-radar business development company (BDC), quietly investing in middle-market companies. But beneath the surface, a startling truth is emerging. While analysts scrutinize interest rates and portfolio performance, a crucial factor is being overlooked: OXSQG's outstanding shares. This isn't just a number; it's a silent story of strategic maneuvering, one that could signal explosive growth in the coming year.

A quick look at OXSQG's quarterly reports unveils an intriguing pattern. The number of common shares outstanding has been steadily rising, with notable surges in recent quarters. In the first quarter of 2023, the figure was a modest 49,858,366 shares. By the third quarter, it had jumped to 56,764,866, a substantial increase of nearly 7 million shares. This isn't just natural growth; it's a calculated maneuver by OXSQG, and it points to a larger strategy at play.

Why the sudden increase in shares? The answer lies in the fundamental nature of BDCs. These investment vehicles are obligated to distribute a significant portion of their earnings as dividends to shareholders. This emphasis on dividends can hinder a BDC's capacity to reinvest profits and fuel rapid expansion. However, issuing new shares provides a clever solution. By infusing fresh capital through share issuance, OXSQG can sustain enticing dividends while simultaneously pursuing ambitious growth strategies.

"For example, in the second quarter of 2023, OXSQG carried out a significant stock offering, generating over $16 million. This influx of capital aligns with the considerable leap in outstanding shares observed in the third quarter. It's a clear sign that OXSQG is strategically employing share issuance to propel its growth trajectory."

OXSQG Outstanding Shares (Millions)

This raises a pertinent question: what is OXSQG's endgame? The answer might reside in the company's recent pivot towards higher-yielding, albeit riskier, investments. Traditional BDCs typically concentrate on senior secured loans, offering lower yields but greater stability. OXSQG, however, has been increasing its exposure to subordinated debt and equity investments, which carry elevated risks but also the potential for substantially higher returns.

This strategic shift in investment approach, combined with the vigorous share issuance, paints a vivid picture of a company poised for a dramatic leap forward. OXSQG is essentially gambling on its ability to generate exceptional returns from its riskier portfolio. The fresh capital from new shares provides a buffer against potential losses, enabling the company to navigate the higher-risk terrain with greater assurance.

However, this approach isn't devoid of risks. If OXSQG's investments fail, the company could experience considerable losses, diluting the value of existing shares. Nevertheless, the potential rewards are equally compelling. If the company's gambles pay off, OXSQG could witness its earnings surge, driving share prices significantly higher and attracting a wave of new investors.

The financial data unveils a narrative of calculated risk and aggressive aspiration. OXSQG isn't merely another ordinary BDC; it's a company teetering on the edge of a potential transformation. The recent share issuance is a pivotal piece of this puzzle, signifying a deliberate strategy to break free from the conventional BDC mold and embrace a path of accelerated growth.

What does this signify for investors? OXSQG represents a high-risk, high-reward opportunity. The company's audacious strategy could yield significant returns for those willing to embrace the volatility. However, investors must be cognizant of the inherent risks associated with OXSQG's investment approach. Thorough due diligence and a comprehensive understanding of the company's strategy are imperative before committing capital.

"Intriguing Note: Oxford Square Capital Corp. draws its name from the historic Oxford Square in London, renowned for its lively marketplace and bustling ambiance. This appears fitting, considering the company's current strategic maneuvers. OXSQG is strategically positioning itself within a high-stakes financial marketplace, prepared to exploit the opportunities, and potentially reap the rewards, that accompany calculated risk-taking."