OFS Capital Corporation (NASDAQ:OFS) Sees Large Growth in Short Interest

Key Points

• Short interest surged 25.8% in April to 330,198 shares (about 2.5% of shares), leaving a days-to-cover of 4.6 based on average volume.
• Earnings miss: OFS reported Q1 EPS of ($0.86) versus $0.21 expected and revenue of $3.57M versus $9.45M, producing a negative net margin of 81.33%.
• High dividend but elevated risk: The stock yields 16.8% ($0.17 quarterly) despite a negative DPR and small $54.3M market cap, and analysts hold a consensus "Reduce" rating after a Weiss downgrade to "Sell".

OFS Capital Corporation (NASDAQ:OFS - Get Free Report) was the target of a significant growth in short interest in April. As of April 15th, there was short interest totaling 330,198 shares, a growth of 25.8% from the March 31st total of 262,534 shares. Approximately 2.5% of the shares of the stock are sold short. Based on an average daily trading volume, of 72,500 shares, the days-to-cover ratio is presently 4.6 days.

OFS Capital Trading Up 0.2%

OFS traded up $0.01 during midday trading on Thursday, reaching $4.05. 39,240 shares of the company's stock traded hands, compared to its average volume of 58,564. The company has a debt-to-equity ratio of 0.45, a current ratio of 0.02 and a quick ratio of 0.02. The firm has a fifty day moving average of $3.72 and a two-hundred day moving average of $4.68. The stock has a market capitalization of $54.27 million, a price-to-earnings ratio of -1.64 and a beta of 0.86. OFS Capital has a 52 week low of $2.72 and a 52 week high of $9.31.

OFS Capital (NASDAQ:OFS - Get Free Report) last issued its quarterly earnings results on Thursday, April 30th. The investment management company reported ($0.86) earnings per share for the quarter, missing the consensus estimate of $0.21 by ($1.07). The company had revenue of $3.57 million for the quarter, compared to the consensus estimate of $9.45 million. OFS Capital had a negative net margin of 81.33% and a positive return on equity of 8.75%.

OFS Capital Dividend Announcement

The company also recently announced a quarterly dividend, which was paid on Tuesday, March 31st. Shareholders of record on Friday, March 20th were paid a dividend of $0.17 per share. The ex-dividend date was Friday, March 20th. This represents a $0.68 dividend on an annualized basis and a yield of 16.8%. OFS Capital's dividend payout ratio (DPR) is presently -27.53%.

Hedge Funds Weigh In On OFS Capital

Hedge funds and other institutional investors have recently modified their holdings of the stock. Royal Bank of Canada grew its stake in shares of OFS Capital by 53.3% in the 4th quarter. Royal Bank of Canada now owns 11,500 shares of the investment management company's stock worth $55,000 after buying an additional 4,000 shares in the last quarter. Bank of America Corp DE grew its stake in shares of OFS Capital by 245.3% during the fourth quarter. Bank of America Corp DE now owns 7,079 shares of the investment management company's stock valued at $57,000 after buying an additional 5,029 shares during the last quarter. Jane Street Group LLC purchased a new stake in OFS Capital in the fourth quarter worth $66,000. Squarepoint Ops LLC purchased a new position in OFS Capital in the 4th quarter worth about $202,000. Finally, Marshall Wace LLP bought a new stake in shares of OFS Capital during the fourth quarter valued at approximately $377,000. Institutional investors own 10.81% of the company's stock.

Analyst Upgrades and Downgrades

Separately, Weiss Ratings lowered shares of OFS Capital from a "hold (c-)" rating to a "sell (d+)" rating in a report on Wednesday, January 7th. One equities research analyst has rated the stock with a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat, OFS Capital currently has a consensus rating of "Reduce" and a consensus target price of $7.00.

OFS Capital Company Profile

OFS Capital Corporation NASDAQ: OFS is a business development company (BDC) that provides customized debt and equity financing solutions to U.S. middle-market companies. As an externally managed BDC, OFS Capital focuses on sponsoring capital structures that support growth initiatives, recapitalizations, acquisitions and other strategic transactions. The firm targets companies that demonstrate strong cash flow potential and scalable business models across a range of industries.

The company's investment portfolio typically includes senior secured loans, unitranche facilities, mezzanine debt and equity co-investments.

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