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THL Credit Inc (FCRD)
Q4Â 2018 Earnings Conference Call
March 07, 2019, 10:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Good morning, and welcome to THL Credit's Earnings Conference Call for its Fourth Fiscal Quarter ended December 31, 2018.
It is my pleasure to turn the call over to Ms. Sabrina Rusnak-Carlson, General Counsel and Chief Compliance Officer of THL Credit. Ms. Rusnak-Carlson, you may begin.
Sabrina Rusnak-Carlson -- General Counsel and Chief Compliance Officer
Thank you, operator. Good morning, and thank you for joining us. With me today are Chris Flynn, our Chief Executive Officer; Jim Fellows, our Advisers Chief Investment Officer; and Terry Olson, our Chief Operating Officer and Chief Financial Officer.
Before we begin, please note that the statements made on this call may constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended. Such statements reflect various assumptions by THL Credit concerning anticipated results that are not guarantees of future performance and are subject to known and unknown uncertainties and other factors that could cause actual results to differ materially from such statements.
The uncertainties and other factors are in some ways beyond management's control and include the factors included in the section entitled risk factors in our most recent Annual Report on Form 10-K as updated by our periodic filings with the Securities and Exchange Commission.
Although we believe that the assumptions on which any forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate. And as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. THL Credit undertakes no duty to update any forward-looking statements made herein. All forward-looking statements speak only as the date of this call.
Our earnings announcement and 10-Q were released -- K were released yesterday afternoon, copies of which can be found on our website, along with the Q4 Earnings Presentation that we may refer to during this call. A webcast replay of this call will be available until March 17, 2019 starting approximately 2 hours after we conclude this morning. To access the replay, please visit our website at www.thlcreditbdc.com.
With that, I'll turn over the call to Chris.
Christopher J. Flynn -- Chief Executive Officer
Thanks, Sabrina, and good morning, everyone. On our earnings call last March, we announced a specific plan for 2018, intended to reduce the risk in our portfolio and provide better alignment with our shareholders. We are very pleased with our execution thus far. But that being said, however, we recognize that our stock price have declined during this period and based on feedback from our shareholders, we understand there are two main areas of uncertainty driving this.
First, NAV stability and second, the dividend. We are in a better position today, given the execution of our plans to address both of -- both of these topics. On today's call, in addition to talking about the progress made in 2018, I'll provide more detail on the concentrated credits in our portfolio and our outlook and address the future earnings power of our portfolio.
Before I do that, let me briefly cover the financial highlights for the quarter. First, our net investment income of $0.23 per share for the quarter, after adjusting for one-time costs associated with our bond refinancing, was $0.26 per share, which is basically in line with our Q4 dividend of $0.27.
Secondly, the NAV for the quarter declined by 9.4% to $9.15 per share, largely due to outsized positions Charming Charlie and LAI. Marks related to the Logan joint venture and other certain credits, which were largely related to market volatility in the Q4 contributed to the decline as well.
Last March, we highlighted four specific action items for 2018 that covered the monetization of non-income producing holdings, the core growth of our assets in first lien and Logan joint venture, improve diversification and our continued commitment to remain aligned with our shareholders. The goal to reduce the risk in the portfolio ultimately narrowed the gap between our stock price and book value. We've made considerable progress on these objectives in 2018 and expect to do so further in 2019.
First, we achieved our goal and monetized over 50% of our non-income equity-producing investments, with the realization of Tri Starr in October and by moving Copperweld to income producing earlier this year. Second, we continued to grow Logan and our first lien assets, which now together represent 84% of the portfolio, up from 78% as of 12/31/17.
Third, we improved the diversification by adding smaller positions and exiting more concentrated positions. The average investment size of the new nine investments made by TCRD in 2018 was only 1.5% based on the fair value, and we reduced the number of positions that are greater than 2.5% of our portfolio from 14 to 11. I'd like to pause here and walk you through the remaining 11 credits that are concentrated.
Slide 16 in our earnings presentation shows our investments by size. While we are proactively monitoring all of the concentrated positions, we are specially focused on four key names, OEM, Charming Charlie, LAI and Holland, which together represent approximately 90% (ph) of the portfolio at 12/31. The other seven credits are generally performing in line with our expectations and several are in either active sale or refinancing processes.
First, I'll address the OEM. It's our largest position. As a reminder, there is no other third-party debt in the capital stack, and as the majority owner of the business, we've taken a number of steps to stabilize it. We provided additional capital in 2018, and have been actively working with the management team and its advisors on several product development, operational, sales initiatives in the past year. We expect to continue this into 2019 to drive better performance and position the company for a sale in late 2019 or early 2020.
Next, let me address Charming Charlie and LAI, which combined contributed over 60% of the decline in our NAV this quarter. Charming Charlie actually had a very strong quarter with increased traffic levels and double-digit positive comp store sales across its store footprint. We have actively led efforts with other constituents in the early part of 2019 to review the capital structure, refinancing an existing asset-based lender. The company completed this refinancing last week and looks well positioned ahead of its important spring selling season with adequate inventory levels.
The notable markdown of the investment in Q4 reflects lower multiples in the retail sector that continue to face headwinds, lower growth expectations for the company in 2019 and the uncertainty regarding liquidity at the end of the year 12/31/18. As we said before, we addressed this refinancing -- we addressed this liquidity risk last week with the refinancing. And as I noted before, we've provided an extended runway for the management team to continue to execute. Our term loans, however, will move to non-accrual status in the fourth quarter when we move the Charlie credit to a five score.
Moving on to LAI, which was marked down for the quarter, is a provider of comprehensive engineering, manufacturing and quality control solutions and components. Persistent delays in certifying certain new manufacturing lines and certain contract constraints created a notable impact on performance and liquidity, which is reflected in our markdown in Q4. The company has an active sale process, and we expect that to be completed in the next 45 days to 60 days.
Holland, a first lien investment, is one of our three remaining energy credits. The company has done well there in a projected downturn and has seen improvements on a number of fronts. The sponsor continues to support the business and liquidity remains strong. We will continue to provide as much detail as we can on these positions on our quarterly earnings calls going forward.
Now, moving on to the dividend. As I've stated on previous calls, we have not previously been comfortable providing guidance on a new dividend level, given the amount of work we had to do on the portfolio. Despite the remaining concentrations that I just mentioned, we believe that the portfolio today has less risk than it did a year ago and we are now in a much better position provide clarity on our dividend. This is based on what we know today and our look forward into 2019 and at the 2020, once the portfolio rotation is complete.
Our efforts over the past several years to shift our portfolio into a predominantly first lien floating rate asset base has resulted in a portfolio mix of lower-yielding assets. Accordingly, our Board of Directors approved the reduction of our dividend to $0.21 per share for Q1 of '19. We believe this dividend level appropriately reflects the current and sustainable earnings power of our portfolio going forward, while providing additional cushion versus our current earnings expectations.
As a result of the execution of our plan in 2018, we now have better visibility on our liquidity and early exits of certain concentrated equity positions, but the BDC now plans to use proceeds to make accretive stock repurchases under new $15 million 10b5-1 plan that we intend to put in place prior to March 15th. I want to point out historically that while the BDC did not have liquidity to buy back shares, the Advisor stepped in and provided support, purchasing over $10 million of stock under its own 10b5-1 program last year.
We have and intend to continue to ensure shareholder alignment, while we finish the execution of our plan and acknowledge the transition of our portfolio has taken longer than anticipated. As a reminder, our Advisor agreed to waive incentive fees in 2018 through the first half of '19.
We're doing more on this front in 2019, as our Advisor has agreed to additional incentive fee waivers to the extent earned through the end of the year. In anticipation of where we are heading through the rest of 2019 and to 2020, we are taking proactive steps today to position our BDC accordingly.
Our BDC -- I'm sorry, our Advisor has agreed to implement changes to our fee structure that are intended to better align with what we expect will be a more diversified senior secured floating rate portfolio in the future. Effective April 1, 2019, our Advisor has agreed to lower our base management fee from 1.5% to 1% on gross assets and lower our incentive fee from 20% to 17.5%. Our hurdle will remain unchanged at 8%. The reduction in our incentive fee is subject to a shareholder approval at our June 2019 Annual Meeting.
Once we have achieved our diversification objectives, we believe it will be accretive to our shareholders to operate with additional leverage in the 1.05 times to 1.15 times range. Our Board of Directors has approved, putting the reduced asset coverage requirement to a shareholder vote on our Annual Meeting in June. If approved and subject to further progress in diversifying our portfolio and successfully amending our credit facility, we intend to introduce additional leverage commencing sometime in 2020.
We believe the actions we've taken in 2018 and 2019 are the right ones. They will ensure a more stable and predictable return base for our BDC and our shareholders, and will position the company for continued progress in 2020 and beyond.
With that, I'll turn the call over to Jim Fellows, our CIO, who will provide a quick update on our portfolio and investment activities this quarter.
James R. Fellows -- Co-Head, Tradable Credit and Chief Investment Officer
Thank you, Chris. Let me first touch upon the market environment, which continues to be competitive with tighter spreads and more aggressive structure and covenants. Amidst the market volatility in Q4, we saw little impact on spreads in the core middle-market businesses with EBITDA in the range of $10 million to $25 million.
We continue to maintain a strong credit discipline, first-sponsored lead transactions in an industry where we have a favorable outlook. We closed on $67 million of investments in Q4. This included $55 million in seven new first-lien investments, including three refinancings of existing positions. We had $12 million in follow-on transactions during the quarter as well.
We closed on three new investments totaling $12 million, subsequent to quarter end, all first lien sponsored transactions. As Chris mentioned, our co-investment capabilities across our private funds and middle-market CLOs have allowed us to take smaller hold size -- hold sizes within the BDC and achieve our diversification goals. I would also point out that the increased deal flow in the second half of the year is attributable to the organizational enhancements we made in the beginning of 2018.
During the quarter, we also recognized proceeds from realizations totaling $74 million, which included the sale of our first lien and control position in Tri Starr, the repayment of our first lien loan and sale of the common equity in Constructive Media and the sale of the Duff & Phelps TRA position. Subsequent to quarter end, we also exited our remaining positions in Alex Toys and Home Partners of America.
Lastly, I would like to touch upon Logan JV, which continue to perform well and grew to 17% of the portfolio at December 31st. The $330 million portfolio, consisting of 130 issuers generated a yield of 12% for TCRD in Q4. There are no loans on non-accrual as of 12/31. The dividend yield reflects stable spread levels, a slower deployment of equity in the second half of 2018 and more selective -- more selectivity on credits during Q4.
With that, I will turn the call over to Terry to give you more detail on the Q4 financial performance. Thank you.
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
Thanks, Jim. Good morning, everyone. First, a few portfolio highlights. At the end of 2018, our portfolio of $494 million was invested 67% in first lien senior secured debt, 17% the Logan JV as Jim mentioned. As a reminder, the Logan JV is 95% invested in first lien assets. The remaining 16% of TCRD's portfolio was held in second lien, subordinated debt and other income-producing and equity holdings.
Copperweld and C&K together represent over half of the 16% I just mentioned. You can refer to slides 13 and 14 in our earnings presentation, which highlights these trends over the last two years. Total non-accruals as a percentage of the portfolio at fair value and costs increased to 3.7% and 7%, respectively, as Charming Charlie was moved to non-accrual in Q4 as Chris mentioned. Charming and Loadmaster are the only loans on non-accrual status at December 31st.
The weighted average yield of the debt and income-producing portfolio, including Logan, was 10.7%, down from 11.6% in Q3, reflecting the new non-accrual. Portfolio remains well positioned from an interest rate perspective with 96% of the portfolio in floating-rate loans.
Moving on to the financials for the fourth quarter. Net investment income was $0.23 per share relative to -- relative to our dividend of $0.27, which included a one-time expense of $0.03 related to the write-off of deferred financing costs associated with -- associated with our 2021 notes that were redeemed in November. Excluding this expense, our core earnings per share were $0.26.
Looking at some of the components of our $15.8 million of investment income this quarter. Interest income decreased from $12.2 million in Q3 to $12 million in Q4 due to the additional non-accrual. This was offset partially by increased prepayment penalties and an increased level of accelerated amortization of upfront costs in Q4 associated with exits. Dividend income was basically flat quarter-over-quarter with -- at $3.4 million, which was comprised of $2.6 million from Logan and the remainder largely from C&K and Copperweld.
On the expense side, total expenses for the quarter were $8.5 million compared to $7.5 million in Q3. The increase was primarily due to the acceleration of the deferred financing costs of about $920,000 associated with the redemption of the notes I mentioned earlier.
Additionally, we continue to see a reduction in other G&A and administrative cost as our direct lending platform continues to scale. The net realized gain of $6.2 million in Q4 was related primarily to our sale of Tri Starr and our investment in Duff & Phelps. These gains were already embedded in the Q3 NAV.
From a leverage and liquidity perspective, leverage levels increased to 0.74 times at 12/31, as proceeds from repayments in Q3 were reinvested in Q4, and our NAV decline from the unrealized depreciation in the portfolio Chris mentioned earlier.
We continue to target a range of 0.6 to 0.8 and expect to operate closer to 0.75 times, as we continue to reposition the portfolio in 2019. In an effort to reduce our cost of capital and as we previously highlighted in our last call, we closed on a $51.6 million public debt offering in Q4. The new notes are priced at 6.125% and are due in 2023, and are not callable for three years. Proceeds were used to redeem our 2021 notes, which had an interest rate of 6.75%.
We also intend to reduce the size of our $275 million revolver this month to $190 million to better align with the size of the portfolio going forward. We anticipate this will save approximately $425,000 per year in unused fees. We expect the reduction in commitments under our senior facility will result in approximately $0.02 per share, one-time charge in connection with the write-off of unamortized deferred financing costs in the first quarter.
With that, I'll turn the call back over to the operator to start the Q&A session.
Questions and Answers:
Operator
(Operator Instructions) Our first question comes from the line of Lee Cooperman with Omega Advisors. Your line is open.
Lee Cooperman -- Omega Advisors -- Analyst
I feel like George Washington, first in the country. Anyway, someone reminded of the novel Charles Dickens -- by Charles Dickens, A tale of Two Cities, to paraphrase the best of times to worst of times. And the analogy of the best of times, I can't think of a manager that has stood more behind their product than you guys. Deferring fees, buying back stock by the manager in the company, reduced the fees, et cetera.
At the worst of times, you guys have done a terrible job. We went public in '13 and change. We have a book value NAV of 9.15. We have a low return on equity. The dividend has now been reduced twice. The market cap of the company is $215 million, which is almost in a relevancy.
So, what I'm looking for is an agreement or pledge that you guys would be proactive. If we can fix the company in the next 12 months, then we're going to return the money to shareholders, as simple as that, if you could. Right now, you're saying that the $0.21 dividend is covered by earnings. It's actually covered, if you pay your full fee. So, you're not subsidizing the $0.21. But if we don't start to improve earnings and improve profitability, then you guys will basically go home, give the shareholders their money and go home peacefully rather than being forced into that position.
So, can I get your comment on that?
Christopher J. Flynn -- Chief Executive Officer
All right. Thanks, Lee. It's Chris. Appreciate your comments. I'd like to first comment more than the second, but unfortunately not in a position to disagree on the overriding performance of the stock. I think as we sit back and look at the position of the portfolio today, I'm trying to give you and other shareholders context. As we sat here at this time last year and folks were asking us questions on, can you buy your stock back at a discount, can you tell me what your dividend was going to be, the portfolio itself was not in a position where the management team felt comfortable. Now, I know the stock has underperformed because we have answered those questions, but hopefully, the market draws the conclusion.
As we sit here today, we are answering those questions. We are giving better guidance on what we think the target areas of pressure are on the portfolio, and we have set a dividend, albeit lower than where it was historically, but it's one where we feel confident through 2019 and 2020 that we're going to be in the 105% to 110% coverage, with our incentive fee being waived once we've turned back on in 2020.
So, there have been mistakes that have been made and the existing team here is doing the best we can to reposition the portfolio and drive value. It's difficult for me to opine on a commitment that you want in the future until I see how the stock continues to perform. All I can tell you right now is we're doing everything in our power to turn this thing into what we think it should be, which is a senior secured, more diversified floating rate BDC, with a very attractive fee construct that generates a 10% ROE. That's our goal. And I think we'll be able to achieve that through 2020.
Lee Cooperman -- Omega Advisors -- Analyst
Obviously, which is a fact, I mean, there's no credibility. The average BDC on March 1st was yielding about 9.6%. Your $0.84 dividend, given in the last, so 6.64 is a 13% yield and you are covering your dividend. It's not like you're paying a dividend in excess of your earnings and the average BDC was selling at a book value of -- I haven't figured out 6.64 divided by, was it 9.15, right?
So, divide that by 9.15, you're selling the 73% of book versus the industry average of selling 100% of book and you are yielding 13% versus 9.6%. So, I would say, if you believe your story, you should accelerate your repurchase, get it out of the way. $15 million is about 7% of the market cap and get that out of the way right away. And I will tell you that if you don't improve the performance, it's not going to be something that's going to be in your hands, you could be forced to do something. That's all I can tell you.
Christopher J. Flynn -- Chief Executive Officer
Yeah. Thanks, Lee. We appreciate it. And we understand and again, I -- hopefully, as we sit back and send signals to the market as we work through this transition, the fact that, for the first time, the BDC's balance sheet in our opinion is stable enough. We have sufficient liquidity, where we can start making these accretive stock buybacks and we are trading at a substantial discount $15 million at 7.5% of our stock. We think that makes sense based on where we sit today. And obviously, we can continue to evaluate that over time based on how the stock performs.
The other thing, just like, philosophically, that I want people to understand about the team that you have working for you on behalf of you today. You're right, Lee. We had a high dividend and we chased it. We chased $0.34 and we put on incremental risk. If you think about the business fundamentals of how you invest, the team that you have today, we look at the businesses, what? We find good businesses. We have good structure and then we price it.
Historically, we are doing that inverted. We were chasing price, then we figured out the structure and then we underwrite the business. That was a bad idea. And that's what created some of these portfolio issues that we're all trying to work through. So, I'm telling you and I'm telling the other shareholders, we're doing it the right way now. We are doing it the right way now, and we will have a portfolio that people will be proud of. It just takes time. I appreciate your patience, Lee, and I always appreciate your feedback. Thanks.
Lee Cooperman -- Omega Advisors -- Analyst
The only thing I would comment is you are learning on our nickel, not your nickel. We take $13, we made it $6.65. But we are wishing you well. Believe me, we are wishing you well.
Christopher J. Flynn -- Chief Executive Officer
Thanks, Lee.
Operator
Thank you. Our next question comes from the line of Kyle Joseph with Jefferies. Your line is open.
Kyle Joseph -- Jefferies -- Analyst
Hey. Morning, guys. Thanks for taking my questions. Given the portfolio rotation we've seen and what not, just wanted to get your expectations on yields. We have a more conservative portfolio. We have a higher LIBOR. Logan is now a bigger contributor. So, just kind of give us your outlook for yields based on the new strategy from here?
Christopher J. Flynn -- Chief Executive Officer
Hey. Thanks, Kyle. I appreciate the question. As Jim Fellows said in his prepared remarks, the expected yield on our senior secured portfolio has been fairly stable. There was obviously some disruption in the broader market in Q4. We didn't experienced that in the middle market.
So, we're not anticipating substantial changes in the simple ROA calculation for our core business. Logan obviously is a key component for us. We think it drives a lot of value to the shareholders. Our long-term expectations there is at still 11.5% to 12% ROE product for us.
Kyle Joseph -- Jefferies -- Analyst
Got it. That's helpful. And then in terms of credit, obviously, you guys gave us good color on the portfolio or on the concentrated positions in the portfolio. But stepping back and looking at the portfolio more broadly, can you give us a sense for credit performance there or more specifically revenue and EBITDA growth?
Christopher J. Flynn -- Chief Executive Officer
Yeah. At a high level, the portfolio is performing fine. There's a handful of names that we highlight that are concentrated positions, as we said 11 names, 7 of the 11, we think are in line with our expectations. The four that we highlighted are a bigger focus for us. But as we said in our prepared remarks, I want to highlight all (ph) and while it's an energy credit, it is the first lien piece of paper.
LAI, as we highlighted is for sale. Charming Charlie, that's in a very tough industry, but it's markdown now. It's only $12.5 million of our portfolio. And then OEM, which is the largest position that we have but we control -- we control the debt and the capital structure. We are the only lender and we control the -- and we control it.
So, we control the options, if you will, on when that gets monetized. So if you look at our gap between book value and the price of our stock, it implies a substantial continued write-offs on assets. And what we've tried to do here is highlight, this is roughly $90 million, $94 million, that $94 million is not worth zero. There is real value in these names. So, it just takes us time to move our way out of these positions. So the broader portfolio is also fine. These four, even though we've highlighted are still OK.
We've gone through our process. We've marked these credits. There is still execution risks as we turn them in from investments into cash. But from our perspective from where we sit here today, we think the gap between our book value and stock prices is implying a draconian scenario that doesn't make sense. Hence, the reason why now we've got enough capital and liquidity. We're going to buy the stock and retire it.
Kyle Joseph -- Jefferies -- Analyst
Got it. That's helpful. And then one last one for me. It does sound like some of these companies are still in the market. So in terms of your outlook for 2019 repayments, could we see a couple quarters with elevated repayments in your opinion?
Christopher J. Flynn -- Chief Executive Officer
Hopefully, on the concentrated positions, but the good news is, is the platform itself is performing very well. We've put out over $400 million of credit in directly originated loans across the entire platform. The BDC participated, when it had capital available, but on a substantially smaller size. Running the portfolio and ability to lead directly originated high-quality good risk adjusted return is what we want, but I want to do it in such a way where the BDC is taking a 1% to 1.5% positions, not 5% positions or 6% positions, which what we are doing historically.
So, even if we do get some repayments which we're hoping for, because we're pushing these on these bigger names, the origination machine working across the platform, be it our private funds or CLOs or middle market CLOs, is working very well. We have a dovetail and put these assets right back to work and the stuff that we want.
Kyle Joseph -- Jefferies -- Analyst
Great. That's very helpful. Thanks for answering my questions.
Christopher J. Flynn -- Chief Executive Officer
Yeah. Thanks, Kyle.
Operator
Thank you. Our next question comes from the line of Leslie Vandegrift, Raymond James. Your line is open.
Leslie Vandegrift -- Raymond James -- Analyst
Hi. Thank you. Good morning. I've just got a quick follow-up on Charming Charlie. You mentioned the refis credit last week, given that change in the capital structure and you talked about fixing those liquidity issues there, do you think that that's going to be coming back to accrual status this quarter or maybe in the next year, what's the outlook there?
Christopher J. Flynn -- Chief Executive Officer
Yeah, that's a great question. Leslie, appreciate it. As we sit back and we thought about the valuation of Charming Charlie at the end of the year, it was a tough situation because the industry itself is under such pressure in finding capital either from secured lenders or from the trade, it is extremely difficult. With that said, the management team has done an excellent job in a very difficult market.
They've taken a business that was struggling and comping down negative and they've turned it around. So, we have increased foot traffic and double-digit comp store sales positive in Q4. So the management team has done a fantastic job in the face of extremely difficult market conditions. So, as we sit here today and again, we're a debt holder and an equity holder, and the company needs liquidity and we need to extend that runway, it just doesn't make sense for us to try to take more capital out of the business and still trying to stabilize it. If we want to support the team and give them the capital, if you will, these are through -- with this amendment that we just did in the refinancing to continue to execute.
So, difficult for us to come back and opine on the accrual status or the non-accrual status in the future quarters. I'd just say that from our perspective, we think that team has done a fantastic job. We want to continue to support them. Getting this ABL deal done was very, very, very important. We'd be having a much different conversation today if that wasn't done. So, again kudos to that team and extending that runway, we think is super important and we'll probably come back and evaluate this in the coming quarters but too difficult for us to opine right now.
Leslie Vandegrift -- Raymond James -- Analyst
Okay. Thank you for that. And then on the marks to NAV, obviously, you went through this specific portfolio company, marks that were intrinsic issues in those valuations. But on the whole portfolio, what impact did spreads in the fourth quarter have on that market?
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
Well, this is Terry. I'd say probably, fairly -- probably closer around 10%, to give a round number. Again, we didn't see this spread widening of the level of the size of business we've been financing of late. Quite frankly, in Q4, we saw some of the transactions that come through our pipeline moved away from us with the spreads that were tightening up widening.
Leslie Vandegrift -- Raymond James -- Analyst
Okay. And then of that, 10% of the move, that was due to spreads. Has that rebounded?
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
Yeah. Again, some of that was related to Logan and we've seen a decent amount of rebound in the early January, early February timeframe. I'll probably say 40% to 50% of it, as it relates to Logan.
Leslie Vandegrift -- Raymond James -- Analyst
Okay. Thank you. Those are my questions.
Christopher J. Flynn -- Chief Executive Officer
Thanks.
Operator
Thank you. Our next question comes from the line of Christopher Testa with National Securities Corporation. Your line is open.
Christopher Testa -- National Securities Corporation -- Analyst
Hi. Good morning, guys. Thanks for taking my questions. I was just wondering, will the votes on the reduced asset coverage and the lower fees be simultaneous?
Sabrina Rusnak-Carlson -- General Counsel and Chief Compliance Officer
They will be simultaneous but not conditioned on one another.
Christopher Testa -- National Securities Corporation -- Analyst
Got it. Yes, that -- I should have placed it that way. Okay. So, there is a potential that you get the lower fees but the shareholders, excuse me, get the lower fees but not reduced asset coverage?
Sabrina Rusnak-Carlson -- General Counsel and Chief Compliance Officer
Correct.
Christopher Testa -- National Securities Corporation -- Analyst
Okay. And sticking with the theme of reduced asset coverage, Logan is nearing 20% of the portfolio. Just wondering your comfort on taking that up to maybe something larger 25% or so, or you looking for that to top out around maybe 20% until you potentially free up the 30% basket with reduced asset coverage?
Christopher J. Flynn -- Chief Executive Officer
We think that makes sense, Chris. We think it's a very, very attractive way for us to drive value, but you plus or minus in the 20%.
Christopher Testa -- National Securities Corporation -- Analyst
Okay. Got it. So, you won't be comfortable, say, taking it up to maybe 25% or so, even if it's attractive just for keeping the 30% basket, somewhat not hitting a red line?
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
Yeah. Chris, this is Terry. We've got several other investments in the 30% basket as well. So, I think some of the ability to move (Multiple Speakers) a little higher than that is based on our ability to continue to move out of those assets. Some will naturally recycle out over time. So, it will ebb and flow, but I think 20 plus or minus is the right number to think about today.
Christopher Testa -- National Securities Corporation -- Analyst
Okay. Got it. Thank you. Appreciate that. And I know you guys put in the deck that you have four non-sponsored investments remaining. I'm guessing, Charming Charlie and LAI are two of them. What are the other two?
Christopher J. Flynn -- Chief Executive Officer
Actually, LAI is sponsored. That's not the case. C&K, OEM and Loadmaster -- I'm sorry, Copperweld.
Christopher Testa -- National Securities Corporation -- Analyst
Copperweld. Okay. Got it. And I know, Copperweld is something you guys have previously turned around. Just wondering how that's been performing and your outlook on that company?
Christopher J. Flynn -- Chief Executive Officer
Excellent. Excellent to both questions.
Christopher Testa -- National Securities Corporation -- Analyst
Okay. And just more of a philosophical one and then I'll hop back in the queue. You guys have had a lot of troubled (ph) companies and you've invested a lot of additional capital in these companies over the past couple of years. Just wondering how you're thinking about this going forward and putting additional capital into troubled investments versus trying to just walking away from them?
Christopher J. Flynn -- Chief Executive Officer
Chris, that's a great question and it's something that we work on every single day as a step back and you have to come back and look at the fundamental business and make sure there is a business plan that warrants follow-on investments.
Obviously, where we've written money in, it's supported the businesses, thus far and we've executed well. I'll use Tri Starr as an example. That was a business that I think, when we took it over, I think our mark in the portfolio was around $0.15. And I think when we eventually exited in this last quarter, I'll look to Terry and he'll list the number. What was the recovery on Tri Starr?
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
The original investment was $0.82 of a $1.
Christopher J. Flynn -- Chief Executive Officer
Yeah. So, from a -- when we've done it, it's worked well, Copperweld, knock-on wood. Hopefully, there will be another example of that. You've seen other portfolio companies out of -- that we've taken losses on that we've exited, through the sale of our position. In those circumstances, would've drawn a conclusion. From our perspective, it makes sense to put more dollars in.
So, it is probably the single biggest or the most difficult position you have to make. You just sit back and evaluate these businesses. But the good news is, is we've got a good team in place and to the extent needed, we would be able to bring in advisors of restructuring firms to help us evaluate those situations. But it's really done on a case-by-case basis.
Christopher Testa -- National Securities Corporation -- Analyst
Got it. Okay. Appreciate the detail on that guidance. Thanks for taking my questions.
Christopher J. Flynn -- Chief Executive Officer
Thanks. Hey, Chris, just one other thing I wanted to clarify and it was nuanced. Your first question on how we positioned the ask (ph), right, for increased leverage and the lower fee reduction. It's the beauty of a simple word and/or or or/and we could have tied those two together. But based on our performance and being consistent with Lee's comments upfront, we thought it was more shareholder-friendly to separate the two. We're signaling to the market, we are going to be a senior secured floating rate high-quality BDC and this is the right fee construct.
With that said, we think the appropriate leverage associated with that is at now 1.05 to 1.15. So, while we could have tied the two together, we didn't feel like that. We feel like the shareholders will be supportive on both of those measures and will enable us to drive that -- to drive that ROE. So, I didn't want you to think that, not linking them wasn't -- it was a conscious decision, but we did it to show our support for -- and I'd say then the shareholders hopefully agreeing with our strategy.
Christopher Testa -- National Securities Corporation -- Analyst
Yeah. No, I could certainly appreciate that, Chris, and appreciate the additional detail and more of a comment than a question. But yeah, I think the shareholders would be -- I don't think it would be a good idea to put it that way and not give you the reduced asset coverage because it's going to enable you to drive a higher sharp ratio and repurchase more stock and grow Logan, which is more senior secured. So, I think it's unlikely you don't get it. But I appreciate your thoughts on that. Thank you.
Christopher J. Flynn -- Chief Executive Officer
Thanks, Chris.
Operator
Thank you. Our next question comes from the line of David Miyazaki with Confluence Investment Management. Your line is open.
David Miyazaki -- Confluence Investment Management -- Analyst
Hi. Good morning. I guess, first just a comment, as a longtime shareholder, I would have to disagree with Mr. Cooperman that there really has only been one city and it's the latter one that he referenced. And it's a frustration that you guys every quarter, every year, keep asking for more time and capital markets don't afford manners that are underperforming endless amount of time and on your stock costs, that's a lot of time to.
So, your inability to commit to changes in recognizing managerial changes is a frustration, if you're not able to deliver. That said, I'm glad to see that you're moving your feet in the right direction. I think that's a good thing. But one thing, that is a question for me is, if LIBOR were to declined by 150 basis points, would your dividend then be -- still be sustainable at the new level that you place?
Christopher J. Flynn -- Chief Executive Officer
Yeah. David, that's a tough question because you're in a static environment, right, where you're saying nothing else changes, but LIBOR drops 150 basis points. If you're going to tell me that LIBOR drops 150 basis points, driven by some market reaction and then the spread over LIBOR stays constant today then, yeah, it would be tough.
But the fact is when LIBOR has fallen or been reduce or using a market force that's driving that, then there is a repositioning of the portfolio and our L plus spreads usually increased to offset that. So, hard question to answer, given that there's multiple variables that drive, what we believe the overriding yield is.
David Miyazaki -- Confluence Investment Management -- Analyst
Well, that actually gets exactly to my point, is that, you guys don't control the level of LIBOR, nor do you control the level of spreads. And so if you're going to be a senior floating rate-oriented BDC, I think it's absolutely the wrong message to send to shareholders that you have a sustainable dividend at the new level because that was what caused the problems that you recognized earlier, that you were reaching for yield in order to maintain the dividend that was not sustainable.
So, my suggestion to you is, if you're changing this and you are resetting the dividend and we've all had to pay your tuition doing this lessons, so maybe the messages saying that you have a new sustainable dividend is the wrong one. The message ought to be, we have positioned the dividend according to what is available in the market today and going forward, we are floating rate senior-oriented BDC.
Christopher J. Flynn -- Chief Executive Officer
I think that's always an (Multiple Speakers) Probably if there is any meaning (Multiple Speakers)
David Miyazaki -- Confluence Investment Management -- Analyst
I think what I heard from you is that you're setting a dividend that you think you can sustain. And I don't think that you can control LIBOR or another level of spreads.
Christopher J. Flynn -- Chief Executive Officer
Okay.
David Miyazaki -- Confluence Investment Management -- Analyst
So, moving on
Christopher J. Flynn -- Chief Executive Officer
How's that different than any other -- any other BDC, where we're giving you data and information based on the market information that we have today. Obviously, if rates continue to contract or if LIBOR goes down or if we run into a resetting, there is an endless supply of variables that will come into the calculation that drives our ability to generate this.
And then I guess, the thing I'd say and I'd clarify a comment, building up a high-quality diversified portfolio is not what got us in trouble. It's the exact opposite. It was taking on really high-risk 14%, 15% contractual yields, chasing $0.34 dividend, when the market yields were contracting, that caused this problem. And I understand that everybody is giving me the commentary on paying for my education here. That's fine. I'll take it. But OEM was done in 2010, eight years ago. We're still working it out. When we underwrote it, it was at 20% IRR. That didn't work out.
David Miyazaki -- Confluence Investment Management -- Analyst
That's exactly my point. That's exactly the point I'm trying to make here is that --
Christopher J. Flynn -- Chief Executive Officer
We are not trying to generate 20% IRR on investment days. We're trying to do senior secured. If people want exposure to senior secured loans, floating rate that are directly originated with what we're doing, we believe we can build a portfolio that's diversified and give folks that exposure. You're right. I'm going to give you market exposure.
If you thought, I will comply and give you market exposure, plus 200 basis points and that's where I set my dividend, that's wrong. We didn't -- I didn't say that or I didn't mean to say, if that's how you took it. We are going to give you market-based exposure and a senior secured highly diversified portfolio with a modest amount of leverage.
David Miyazaki -- Confluence Investment Management -- Analyst
All right. Well, we can move on. The point that I'm trying to make is that I don't like the word sustainable attached to a dividend when it's the floating rate portfolio. It ought to be a floating rate dividend, a floating dividend.
Christopher J. Flynn -- Chief Executive Officer
Okay.
David Miyazaki -- Confluence Investment Management -- Analyst
So, moving on from that, was -- there are other BDCs out there that are very senior oriented, they are senior secured, they never ran into the rocks or the credit problems that come from chasing the bad deals. There are ones that are floating rate explicitly that way, and they are already in the market that you are talking about, sponsored bigger deals, bigger borrowers.
What is it that you are going to be doing that is different from them, because if I as an investor can go buy them today and not have to deal with the tuition expenses investing in THL, if I can buy them and not have to worry about the workouts from loans that were made eight years ago, why would I buy THL if you eventually get to the destination you're describing? What is it that's going to be different or better than what other alternatives are among senior-oriented BDCs?
Christopher J. Flynn -- Chief Executive Officer
So two things. First, I appreciate the question. I think as you sit back and how we positioned ourselves, it's not just the BDC that's participating in our strategy. It's the other private funds that we've managed as well. The exposure that we're providing versus some of the others, you mentioned larger transactions, that's not the case. Our portfolio mix isn't going to change, it's still $10 million to $40 million in EBITDA with an average around $15 million to $20 million. Some of the larger players that I believe you referenced are giving you exposure substantially higher than that. So I do think these (Multiple Speakers).
David Miyazaki -- Confluence Investment Management -- Analyst
Not all of them. Many of them are in that wheelhouse that you're describing.
Christopher J. Flynn -- Chief Executive Officer
Some, but that the exposure that we're going to give. And the comment on why buy us today versus others, fortunately, unfortunately you agree with our ability to execute. We are trading at a substantial discount to book. I wish we weren't. At one point, we won't be. But right now, we've try to tell the market exactly where we're going, we try to highlight where we think the risk is in the portfolio, we think the gap to book is too wide and the folks that believe us, and we think if we execute, we will be rewarded for that.
David Miyazaki -- Confluence Investment Management -- Analyst
Well, the discounted price is certainly something to think about, but I'm not really hearing that you're -- what you're going to be originating is really going to be that different, because there are some BDCs that are smaller that are in the $10 million to $40 million EBITDA range that are senior-oriented and floating rate. So I mean -- what you're telling me is that the reason to own your stock is because of the discount to NAV, but as that goes away, is there a reason to keep owning your stock?
Christopher J. Flynn -- Chief Executive Officer
If you want a high-yield high-quality senior secured portfolio that generates a 10% ROE, I would say the answer to that is yes. I -- listen Dave, I appreciate your support and I understand your frustration, but your question came to be pushing me and the team at a bit of a direction. We're not going -- we try to differentiate ourselves historically by saying, hey, we're going to give unsponsored mezz.
We're going to do something that's different. We're not going to be another me-too BDC and that's what's created the volatility. From my perspective, what the shareholder wants and what I hope the shareholder wants, what we're going to try to deliver, is access to a market that they can't get anywhere else, I mean other than other BDCs. I am not suggesting we're the only player, we're not, or we're giving investors the opportunity to access sponsor-backed senior-secured high-quality risk-adjusted return with a modest amount of leverage is that, why do I think I'm different than the other asset managers.
I'm attached to $16 billion platform, I've got multiple private funds that are driving down my expense ratio, I've generated over $400 million, $500 million of unique direct lien assets over the last 12 months or 18 months. And once the BDC is participating, other competitors don't have that same funnel or ability or attachment to a larger platform to participate in that. That are competing in the $10 million to $40 million range.
Most of the folks that have got a $16 billion business card are in upper-market deals. We have a $16 billion business part, but we're taking that size and scale and trying to execute in that $10 million to $40 million range. But I'm not -- what I don't want to do and I don't think you're asking me this, I'm not going to come back and say, hey, we've got proprietary deal flow, that's going to price 100 basis points or 200 basis points wider than market, because when people tell you that, they're wrong.
They don't -- the markets to competitive, it's very competitive and we're not going to go chase that again. So, I think based on the feedback I've gotten, you can tell me you disagree, that people are upset with us, it's not -- our dividend is actually done OK. We paid it out and let them cut. It's really NAV, the lack of NAV stability. And the only way I can fix NAV stability is to A, run diversified and run more senior secured. It's all about portfolio construction.
Our portfolio out of the box was built wrong. I said this in the call last year. We went public very small. No one could go public again today at $250 million, nor should they, in my opinion. But we did it and that created this concentrated portfolio where we are stretching for yield and now we are paying the price for it. I will go into school for it, use the tuition example that I used. So I did that, but we've raised substantial amount of capital outside of this. We're not bad at credit, I know it looks like, because we've got concentrated losses inside of the BDC, but we're not bad at credit. We've raised substantial capital associated with that.
Our expense ratio has done nothing, but go down. We've allocated costs away. We subsidized and supported the BDC in multiple ways. And so, we get those fixed, but these things take time. I know people think capital markets are efficient and they are, but these are underperforming illiquid credit and those take time. As I own the business, it's because the business is underperformed. I'm going to stabilize it, getting the management team in, put additional capital in, and then hopefully show some form of growth that I can drive some recovery on that. And that maybe takes longer than people expect, the trade stocks for a living, but it takes time.
David Miyazaki -- Confluence Investment Management -- Analyst
Well, even from somebody who has been a longtime shareholder and afforded you a lot of time, and paid for a lot of tuition, there is a limit at some point and I wish you the best and I hope you are able to execute this, but from my perspective, I'm just not sure about your destination and I'm not sure about how much time it's going to take to get there. But thank you for answering my questions.
Thanks, Dave. We appreciate it.
Operator
Thank you. Our next question comes from the line of Chris York with JMP securities. Your line is open.
Thomas Wenk -- JMP securities LLC -- Analyst
Good morning, guys. Tom Wenk in for Chris York this morning. Thanks for taking my questions. A quick one on staffing in the direct lending platform. How many investment professionals are responsible for the BDC at year-end and how many are responsible for sourcing? I guess, what I'm trying to get at is, do you think this level of staff or the size of staff is enough to really win deals and grow the portfolio in this really competitive lending environment, and would you consider potentially adding to the team?
Christopher J. Flynn -- Chief Executive Officer
Yes, thanks Tom. I appreciate the question. If you think -- I'll step back, the overall firm itself has almost 90 employees, 47 investment professionals across the entire platform, 20 of which are dedicated to direct lending. I don't know how much you followed our story, but historically we were in the five-office footprint which with respective field teams in each respective office. What we've done is, we've consolidated credits, we've got better control and more efficiency with some consolidated credit in Chicago. We still maintain that five-office footprint Boston, New York, Chicago, Dallas and Los Angeles from an origination standpoint.
So we've got originators, one or two originators in each one of those regional offices and we've got a full credit team sitting in Chicago that's doing all of our underwriting and portfolio management. To the extent, we've raised more capital privately because obviously we're not raising capital publicly right now. We continue to add to the staff and we'll continue to do so. Adding to the staff has not been an issue for us.
Thomas Wenk -- JMP securities LLC -- Analyst
Got it, got it. Understood. All right, thank you. In terms of Charming Charlie, you seem to have relatively high conviction on the name over the past few years. Has been at the Top 5 investment in terms of size. Is there anything specific you guys think you ultimately got wrong in terms of underwriting its credit?
Christopher J. Flynn -- Chief Executive Officer
Yes. Listen, first, it was brick-and-mortar retail. At the time the market was moving away from brick-and-mortar retail. Second, we had operational entrepreneur CEO who had growth expansions well beyond the financial means with the balance sheet. And then three, we took a massively concentrated position. That wasn't because of the high conviction name, it's because we didn't have disciplined upfront when we were building these portfolios historically. Even if we like the name, buying it at a full 5% or 6% position on a single name doesn't makes sense. We're buying 1% to 1.5% positions today.
So when I come back, until you've got high conviction on the name, listen the name is not extremely tough, it's facing industry headwinds that are -- have been insurmountable for some. The good news for us as we sit here today is when we took over and restructured the balance sheet, we found a fantastic management team that had done nothing but execute, in the phase of this difficult situation. Do I exactly know how Charming Charlie is going to play out in the future? I don't. You saw all the market down based on the industry dynamics, but that's not a reflection on the management team, the management team has done a fantastic job there.
If you look at over -- any other brick-and-mortar retail, very few if any, produced double-digit comp store sales increases than these guys did. So like I said before, we're super happy that we were able to get the refinancing done this last week to extend the runway. I hope that the team continues to execute them and we'll see how the industry plays, but it's a tough claim given that the industry sector was wrong upfront.
Thomas Wenk -- JMP securities LLC -- Analyst
Okay. Understood. Well, that's great. Thanks for the feedback, guys. That's it from me.
Christopher J. Flynn -- Chief Executive Officer
All right. Thanks, Tom.
Thomas Wenk -- JMP securities LLC -- Analyst
Thank you.
Operator
Thank you. Our next question comes from the line of Ryan Lynch with KBW. Your line is open.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Hey. Good morning. I just wanted to talk about you guys, kind of portfolio repositioning strategy, part of your strategy consist of moving to larger company sponsored-backed higher in the capital structure. And I would agree that that's certainly a safer route and an investment strategy should go with. But I would say, we've seen other BDCs who are already doing that strategy not have success in those same areas.
And conversely, we've seen BDCs invest with smaller companies doing non-sponsored deals and junior debt have quite a bit of success. So, you can have success really in either of those venues. So, I would agree that moving to larger companies sponsor-backed companies, higher in the capital structure is a less risky strategy. Have you or does this really fix the credit underwriting process of identifying good credits from bad credits?
Christopher J. Flynn -- Chief Executive Officer
Thanks. I appreciate the question and I have a few comments. I guess, I made this reference earlier, one of the questions, I think, as you sit back and I spent time with Jim Fellows and Jim's invested in credit for a number of years through a number of cycles. And fundamental issue historically was, as I said before, is the sequencing of how decisions are made.
The right way to build a portfolio is to find a very good business, get a good structure and then price and security. Our issues historically regardless of whether it was senior secured sponsored, unsponsored, we were doing price structure business and that's what causes the issue. So, I think, fundamentally, from a philosophical standpoint, from a process standpoint, from an underwriting standpoint, we've addressed those issues and we've done a very good job of that. So, I don't anticipate seeing future mistakes, if you will, in that thing.
On the other comment on smaller BDCs that are doing smaller deals that are done on unsponsored, I've been down that road and everybody loves that portfolio until you don't. It sounds great on paper. And listen, maybe these guys are fine. I'm not saying that their book is positive or negative. But from my perspective, as you build out a portfolio of loans, I strongly feel that there'll be a massive differentiation to a loss given defaults in a senior secure sponsor backed portfolio, then there will -- then there will be a much larger loss given default in a unsecured or senior stretch or mezz or whatever you want to call it in an unsponsored portfolio.
And if I go back to, I'll stick with the theme of the education that we're all going through. Stability of NAV is mission critical to our shareholders, and we believe that we can build the most stable book of business and the most stable NAV, high in the capital structure with the sponsor and our businesses that will generate good returns. So, it's -- the business is in fact complicated if you execute it and you've got the parameters upfront to do it the right way and we believe that we've got that going right now.
If you look across our entire portfolio, we've done a lot of investments outside of the BDC and there's a meaningful difference between where we've had issues in credit and losses, be it unsponsored or sponsored, be it secured or unsecured or loss given default in those portfolios in our opinion in the downturn, when the downturn happens is going to be substantially higher in our opinion.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Okay. Understood. And then, I wanted to discuss your plans regarding leverage a little bit. You guys have talked about asking for shareholder vote and that increase in leverage level to 105 to 115. I mean, leverage really just magnifies resolves. If you have good results, more leverage would have made those results better. If you had poor results, leverage would've just magnified them worse.
And so given the track record and given the portfolio reposition and the credit issues that you guys are still working through today, why does it make sense to add shareholder for more leverage and why does adding on more leverage seem like a good thing for shareholders today.
Christopher J. Flynn -- Chief Executive Officer
Thanks. I appreciate the question. It's a good one and it's something that I have spent a lot of time on. If you recall in previous calls, folks had asked us if we would consider putting leverage on the portfolio and to your point, that's the last thing our portfolio needed historically. It only exaggerated the volatility to NAV, with the increased leverage.
So, I think we've been very prudent in our approach and it has come back consistent to the market. And said, we won't ask, nor will we consider higher leverage until we make the portfolio stabilized. With that said, as we sit here today, as we are still continuing to work through those, we're not done, we do think it makes sense for us to have that option to increase the leverage, starting in 2020, as we finish up the repositioning. And I think as you sit back and you look at the portfolio of loans that are substantially more diversified, the added leverage does -- is accretive to the shareholder and does makes sense.
Again, it's not a huge increase. I think we're on a 0.7 to 0.8 or moving to 0.1, 0.5 to 1.15, and I don't want to discount it. It's higher leverage. But given the new asset mix that we have and the increased diversification, we think it's prudent and accretive to the shareholder and that's why we're seeking it.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Okay. Understood. And then on the share repurchase program. From the press release, you talk about repurchasing shares that are accretive to shareholders with proceeds from exits of additional control equity positions this year is what you guys state.
I just want to get a clarification. Is the portfolio -- the share repurchase, is that contingent on exiting -- contingent on using proceeds from exiting control equity positions or it can now go into effect immediately, once you guys get that in place?
Christopher J. Flynn -- Chief Executive Officer
It's going to go into effect. It's -- I think we were trying to, in the back of our mind, as we manage the business, we've always thought there was a correlation for us in an equity need position to maybe more diversified pool of assets. But as, I think Terry said in his remarks or I said in my remarks, we plan on having the same implemented in the next -- by March 15th, I believe is the actual date and we will be active.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Okay. And then just one last one. On the Logan JV, I know you said, I think, some of the mark-to-market volatility was the reason for the decline in fair value. But I also noticed that the dividend return had dropped from slide 17 to about 12%. You historically have been running in that kind of the 13% to 14% range. So, can you talk about why the dividend was a 12% yield this quarter, and should we expect that lower yield going forward or what really drove that this quarter?
Christopher J. Flynn -- Chief Executive Officer
Jim, do you want to take this?
James R. Fellows -- Co-Head, Tradable Credit and Chief Investment Officer
Yeah, I'll take the question. In the fourth quarter of '18, we had a slower level repayment activity in the broader low markets. So, that slowed the accretion of OID that we had been accretive earlier in the year, when the market was much more active, that repricing and repayment activity.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Okay. As we kind of look into Q1, are we still seeing that slower repayment activity? And so, we should expect that kind of the dividend yield to stay around this level or we've seen repayment activity pick back up to where it looks like you guys kind of ran in 2018 and corresponding a 13 plus percent dividend yield from the Logan?
James R. Fellows -- Co-Head, Tradable Credit and Chief Investment Officer
Activity -- repayment activities continues to be slower than what we've seen, call it a year ago, nine months ago. So, 12% should stay fairly consistent with last quarter for this quarter.
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
Okay. Okay. Thanks for taking my questions. I appreciate the time today.
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
This is Terry. Just before we jump to the next person in the queue, I just wanted to clarify a remark we made earlier in response to Leslie about the percent of the portfolio of markdowns related to credit versus market metrics, I referred to 10%. That's 10% excluded Logan. Logan contributed to set 15% on its own. So, I just wanted to make sure that the group had that clarification.
Operator, you can go to the next person in the queue, please.
Operator
All right. We have a follow-up question from Lee Cooperman. Your line is open.
Lee Cooperman -- Omega Advisors -- Analyst
Yeah. Hi. Listening to all this conversation. I guess, the question I'd ask is, if I was on the Board or a member of management, is what can you do with your money that's better than buying something back at a 27% discount to book value that has a cash yield of 13%, the statue alternative?
No, I understand the negative of doing that. The negative of doing that is you continue to shrink yourself and you are already probably marginal in terms of your size. But what we have to step back and understand is, in the last decade, Wall Street has created a lot of companies in the BDC, MLP, REIT space that only made sense when they sold at a premium to NAV. The game was, do an offering, buy assets, raised the dividend, do an offering, buy assets, raised the dividend. And once you go to a discount to NAV, the game is over.
And what separates the men from the boys, if I could use the sexist analogy, is those that understand it and do right by their shareholders. In the extreme case, they say the game is no longer relevant when you liquidate, give all your money back or we're going to basically buyback dollar bills that are selling at a 25% discount because that's the best thing for the shareholders, make ourselves smaller and is that we make ourselves too small then we've got to take the final step.
Now, as that complemented -- it complimented you guys at the beginning. You've done a lot of things to support the vehicle. But if we're not economic, don't torture us, just give us back our money. And I think the best way to take the first step in that regard is to accelerate your repurchase program. If you believe the 9.15 NAV is a low point and at a dividend of $0.21 times four $0.84 is sustainable, because the stock shouldn't be over (ph) 13% and buying a dollar book back for $0.75 is your best alternative and don't wait, do it now. But if you have doubts about the NAV at 9.15, don't leverage up and don't buy back stock. That's my recommendation and expect me to be vocal about your behavior.
Christopher J. Flynn -- Chief Executive Officer
Thanks, Lee. I'm not sure there was a question there. So -- but I appreciate your statement and the comment. I think the only thing I'd highlight is, we understand the economics of the discount to book value. And as a management team, it's not that we didn't want to be buying the stock back at a discount. That was the balance sheet given where it was, was not in a position to do that. We thought that was putting you on too much risk.
And to your point, at too much uncertainty and some of these names as we sit here today, given that we've announced a sizable program that we intend to use, I hope the market looks at that as a step forward in the right direction. Is that a big enough step? We'll see how the stock performs and how the portfolio performs. But it is fully viewed as a good first step forward.
Lee Cooperman -- Omega Advisors -- Analyst
No, I would make one other recommendation. You guys should not make one new loan as long as your stock is 25% below NAV and yields 13%, and you have confidence in your cash flow and you have confidence in the stability of your book value. I would not make new loans because new loans cannot compete with your own stock. And understand the more stock you buy back, the more model you make yourself, the more less efficient you are as a vehicle, but so be it. The world has changed and we have to recognize that. But I wish you good luck.
Christopher J. Flynn -- Chief Executive Officer
Thanks, Lee. And again, just from a size perspective, we're not afraid to shrink the BDC to the extent it makes sense because we have other avenues of capital inside the platform, where we can still go out and execute our plan. I don't want people to draw an conclusion there that the BDC is getting smaller that we're still not executing it.
And as I said earlier to someone's question, I think we originated over $400 million that we think would be very nice senior secured assets in 2018 and the BDC just participated in some, albeit at a small size, which I think is appropriate. But we recognize the comment and don't disagree that buying dollar bills for $0.75 make sense even for -- even for a debt guy like me to follow.
Operator
I'm showing no further questions in the queue. I would now like to turn the call back over to Chris for closing remarks.
Christopher J. Flynn -- Chief Executive Officer
Thanks, everyone, for joining the call. Our goal today was to provide more clarity on what we believe to be the future earnings power of the portfolio based on what we know today and provide our vision of what we think the BDC will be for 2019 and into 2020, as we complete this portfolio rotation. We remain focused on the execution of our plan and look forward to updating you on our progress next quarter. Thank you.
Operator
Ladies and gentlemen, that concludes today's call. Thank you for participating. You may now disconnect. Everyone have a wonderful day.
Duration: 68 minutes
Call participants:
Sabrina Rusnak-Carlson -- General Counsel and Chief Compliance Officer
Christopher J. Flynn -- Chief Executive Officer
James R. Fellows -- Co-Head, Tradable Credit and Chief Investment Officer
Terrence W. Olson -- Chief Operating Officer and Chief Financial Officer
Lee Cooperman -- Omega Advisors -- Analyst
Kyle Joseph -- Jefferies -- Analyst
Leslie Vandegrift -- Raymond James -- Analyst
Christopher Testa -- National Securities Corporation -- Analyst
David Miyazaki -- Confluence Investment Management -- Analyst
Thomas Wenk -- JMP securities LLC -- Analyst
Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst
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