Two things have become fixed at RSO. First, regardless of the logic, this is perceived to be in the same category as agency REIT's like NLY, and therefore is doomed to trade at near the same yield, even though arguably the business model here is much more forgiving to changes in interest rates.
Second, as some on this board foresaw, the legacy securitizations are running down, the reinvestment periods are lapsing in sequence, and further repayments have to be returned to investors until they are paid off. Therefore, without new CLO/CDO entities being created, it becomes increasingly difficult to maintain cash flow. It would seem that if the securitization model was going to be revived, we would have seen it by now. Say goodbye to the long defended dollar, 80 cents is the new "promise", and how long will that stay good? They're scrambling for other business, but that changes the whole model of what RSO was about.
So, can you own this? The return is very enticing. I think the answer is yes, but it's probably only safe to hold it for about three dividend payments (and be prepared to flee if there's a shortfall in AFFO). After that things could get dicey. And don't expect much in the way of price movement, if 80 cents is going to be it for 2014, then we're probably stuck right about here. I'm out, but considering coming back in, briefly, just as a place to park money. I'd like a better price, but it doesn't seem like there's much chance of getting it if you want the January dividend.
in other words, rso is not the exciting firm and stock that it once was? has jc lost his mojo? will it ever return? or ... will rso become yet another boring reit, barely treading water? whatever happened to the all the opportunity that many saw in this company? a few years ago, not so long past, many here were expressing how much better rso was than ras. now, it seems that ras has risen from the rubble and rso has nothing but critics. is it just the div now that keeps interest? if so .... for how long?
I would suggest that the difference is management. RAS got new management and has been making things happen, NRF has the same management and has been making things happen. RSO, however, almost seems content to set back and hope something happens. Opportunities are there, its a matter of taking advantage of them. ruby has the right idea, wait for a couple of more quarters and then if things aren't happening, move on.
I'm out right now, but I recently used RSO as a trader because of the range it seems to float around in. If any unexplained dips come along I'll buy. Worst case I have to hold through a couple dividends to get out again.