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OHA Investment: Denies Blockchain Rumors

BDCs:
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In a most unusual move, micro-BDC OHA Investment (OHAI) issued a press release on Monday December 18, 2017 before the open to announce what it’s NOT investing in. In this case, OHAI pointed to the huge increase in the volume of its shares trading last week (especially last Friday) and the ensuing stock price increase in its price to $1.36 a share as the reason for speaking out. The BDC then quashed the rumor swirling around Wall Street- which the BDC Reporter was not aware of despite our ear-to-the-ground approach to BDC news- of being involved in “blockchain platform”.

As you might expect this caused investors who had been anticipating such a move – and many others besides – to trade out of OHAI at the open (a few minutes ago as we write this). Fifteen minutes after the market opened for business over 1.4mn shares have changed hands. The normal daily average is 66,000… The stock price has dropped back to $1.15.


VIEWS

To our eternal shame, we have only the roughest idea of what a “blockchain loan platform” might be. A Google Search mostly revealed today’s news about OHAI.

However, we have reported previously that OHAI – having divested itself or written down virtually all its energy investments – has made comments on its most recent Conference Call of finally considering what the BDC’s next strategic step might be.

The Investment Advisor has offered up a number of compensation concessions which reach into 2018.

However – as has been the case for several years – Oak Hill Advisors -which has served as the Investment Advisor since the summer of 2014 has been vague about the options under consideration.

The BDC Reporter has been asking rhetorically since 2016: “What Is The End Game ? “

There is an irony that the first time OHAI shareholders receive specific guidance from the Investment Advisor is to be told what they are not going to do.

Nonetheless, once this brouhaha settles down investors should still be expecting some sort of major change in the direction of OHAI in 2018.


INVESTMENT APPROACH

Common Stock

We are Long OHAI’s common stock, as reported in our Investment Disclosure Table and mentioned in prior articles.

We invested under the premise that even under a conservative valuation for remaining investments, the “real” book value of the BDC is higher than the stock price at the time of our purchase.

With some sort ofstrategic change coming, we have assumed that a cleaned up and re-directed OHAI in most any form will be worth $1.50 a share or greater.

The blockchain episode may knock the stock price down sufficiently to cause us to acquire an even greater stake.

If OHAI drops below $1.0 a share, we will be considering a second bite at the apple in our Special Situation Strategy. 

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