The Solar guys started investing in 2007 and if one reads the 10K would see that they've taken significant realized losses on their portfolio. They hardly started investing at the bottom -- in fact most of their investments were made in 2007 at the top of the market. That said, I think the underlying portfolio today is relatively good and that it will appreciate in value from here driven by strong technicals in the credit market. The promise of the new mortgage REITs was the prospect of owning a portfolio without bad assets underwritten at the bottom or close to the bottom of the market. Once they ramp their dividends the stocks will NOT remain dead money. That said, I agree that Solar is cheap (due to them being relatively unknown) and they should trade at the same earnings yield the better quality names trade at. Another benefit -- a largely undrawn credit facility, the cash raised from selling equity, and loan paydowns should translate into the ability to invest on the order of $300 mm in mezz debt at 13-14%ish yields.
I should have said that because the bad loans are written down that we are getting in at a bottom of market valuation. I would expect that SLRC will trade closer to AINV and ARCC in terms of a slight premium to nav and a yield closer to those two because SLRC's characteristics and mgmt appear to be better of breed than some of the other BDCs.
Since we are not "paying" for those writedowns and writeoffs mgmt went to school during 2007 and the fact that their normalized dividend is so high is a temporary distortion IMO.