So it’s all kind of part of the strategy. We sold down our non-QM portfolio. The spreads are still wide there, but we thought that it was the right tactical move to make. And we’ve talked about how we’ve also been reducing the size of our bridge loan portfolio, again as we’re sort of making room for these investments. So we’re trying not to be too short-term oriented. And if we can take advantage of some distressed situations, that can help us, like I said, build book value back up. And then I think once we do that — because those are sort of capital gain type situations. You’re buying — if we buy distressed assets, whether it’s in loans or CMBS, we can…
Lee Cooperman: We can be surprised if the dividend was not restored by the end of the year?
Laurence Penn: Restored to — you mean to the prior level? I don’t think you should view that as an expectation.
Lee Cooperman: Got you. Okay. Second question. In the past you’ve bought back stock and chose to trade around 80% of book. Would you say that that strategy is likely to change or remain the same?
Laurence Penn: I would say, that strategy is not likely to change. I think I mentioned in my remarks that we’re — we were in range earlier today and we’re certainly — I don’t want to comment on specifically whether we’re in range now, but we’re certainly within range.
Lee Cooperman: 80% of 13 and change is 10.50?
Laurence Penn: No, no, no I think…
JR Herlihy: 13.83 was our year end book.
Laurence Penn: Yes, 13.83, right. So I think…
Lee Cooperman: What’s 80% of 13.83?
Laurence Penn: Yes, 11.06.
Lee Cooperman: Okay. Finally…
Laurence Penn: I mean, again, we try not to…
Lee Cooperman: We are making observation. The idea of taking undervalued public market equity and paying private market value by business, the question was strategy. Do you agree with that or disagree?
Laurence Penn: What — how does that apply to us?
Lee Cooperman: In other words, we understand that we don’t — because part of the dilution was a result of the acquisition you made. If you didn’t make the acquisition, you wouldn’t have the dilution. So what I’m saying, I’ve seen over the years, companies continue to do deals and take undervalued works in market stock and pay private market value by businesses, which I think it’s a questionable strategy.
Laurence Penn: Right. No, look, I agree. I think we had some very specific reasons. We also had some — for this transaction. We love getting into the MSR business. And I think now that we’re in it with the acquisition, that is another area where we could see very high returns on equity. I think 1.1% dilution is pretty modest frankly for growing our equity base by $200 million. But I hear you. It’s not something — and look, we — I’ll just say another thing too. I can’t get into too much detail here. But we — well, the fact that we had to deal sort of in process, I guess, in 2023, right only one of them was consummated, but that was the highly unusual, right. We had never done that before. So I don’t think you should extrapolate from that as sort of establishing a pattern.
Lee Cooperman: All right, good. I just want to make sure you understand the view. All right. Good luck. Thank you.
Laurence Penn: Thanks, Lee.
JR Herlihy: Thanks.
Operator: The next question comes from Matthew Howlett with B. Riley.
Matthew Howlett: Hey, guys. Thanks for taking my question. I guess, just on Longbridge. When you first consolidated it, I mean, it was contributing $0.09, $0.10 of distributable earnings. I mean, when it’s going good, it’s going great. Obviously, I think you said mid — you expect it to turn mid this year. My question is just on the commitment to it. Obviously, it’s a new segment. We’re all getting used to it. Would you like to grow it, would you want to make acquisitions, would you consider at some point could you sell it at one point less than 30%? But I just wanted to hear the investment case for keeping it and what the value it is for shareholders?
Laurence Penn: Yes, look, thanks. It’s taking up. This was a big investment of ours and it’s grown. So we have got a lot of capital in the business, both in the forms of, I’ll just say harder assets like loans and servicing. And then, of course, then you’ve got the franchise. So it’s a business that we absolutely believe in long-term. And we’ve — since we — well, since we started many years ago and even since late 2022 when we bought the other half of it, and as you said, consolidated it, we’ve — Longbridge has been growing market share quite a bit. It’s been a tough business. Longbridge has actually I think done great relative to the competition. We’ve added servicing at very attractive values and I think we’re going to do more of that.
And that’s again a great sort of ADE generator. And I think there are going to be more comp, more of the competitors sort of falling by the wayside. And demographically, this is an area where I think just obviously there’s a lot of growth. So we believe in the business. We believe in the long-term prospects. It’s — there’s nothing we can do about the macro environment with rates where they are. But JR talked about how we’ve been increasing prop. And so you’re not — that’s sort of a growth area for us and the yields are very attractive. We absolutely believe in our long-term look. Anything is possible in terms of many, many, many years from now or whatever. We get full value from someone, really full value and decide to sell it, of course, it’s possible.
