I was in at the crash too, but I also had to sit on some shares I bought in late 2008 before they pulled out the rug on the distribution. As the recap became more clear I continued to add, and sold right after the recap, waited a bit and bought more through the rights, which turned out (probably by luck) to be the most efficient move. Anyway, it's now my second largest holding, probably I'll hold it to the grave, barring some future problem.
It's off the map, isn't it? I must say I was surprised, and I intend to start modeling EROC vs. the Kerrisdale projections starting next quarter, and will keep a weather eye here for the first hint of liquidity troubles. The ratio should improve quite a bit by mid 2011, but obviously this company is vulnerable to a serious economic downturn.
My first instinct is to cut way back here and re-deploy, which would only result in a modest income reduction due to recent yield compression. Unfortunately, as a result of getting back in through purchasing rights, I'm looking at s/t gain, and I'm already sitting on a huge stack for 2010, I'd get killed. I'd really like to sneak into mid 2011, but I've always bailed when liquidity appeared to be issue, and I wouldn't hesitate if that was the case here, taxes be damned.
There will of course be an automatic $125M influx of capital through the warrants. If that was in place right now, the ratio would drop to 7.5, even with current maintenance capex, but that's still way too high. We'll see, the Kerrisdale numbers were decent, let's see how close actual results are to their targets.