Solar Capital Ltd (SLRC)

[mthiker2004]

Jan: Thanks for the workup.

I have thought for quite a while that if SLRC started earning NII that covered the dividend, we would see a $27 stock. I'm sure there is more to the languishing stock price than that, but now that SLRC is finally covering the dividend with NII (pre-Crystal acquisition), and has dramatically increased the portfolio size in an immediately accretive way (but I do agree Q4 may be pretty dismal with acquisition costs and presumably a much higher mgmt fee based on gross assets without a corresponding quarter of earnings from the Crystal acquisition), I think we are positioned to see some meaningful capital appreciation. I am not as courageous as you about predicting Crystal's possible contribution to NII and dividends, so am not yet willing to try to predict a new price target.

I also agree that a modest equity offering is likely in Q1, perhaps along with some intermediate term debt financing. The former to reduce the debt/equity at hopefully above NAV prices, and the latter to replenish dry powder, although at 60% debt/equity, there isn't really a compelling reason to increase equity.

GLTA.