Valuation on MMAC

MMAC is a financial service company that mainly focuses on lending to late-stage solar infrastructure projects. These loans are an average of $19MM. With an average coupon around 10% to 12%. It takes years to complete and get approval for these solar projects so they are heavily incentives to finish these projects. As solar gets cheaper there is the headwind for more installations. They have grown their book value and earning proportionally as the solar construction lending business scales. They also have racked up 400M of NOL from their previous business in real estate and after the GFC.

MMAC is trading under its book value. Its book value of 218 M while it is trading at 148 M at a 32% discount. Since this is a financial service company, the book value would be the most accurate measure of the company. Since finding the book value of loans is much easier than find the book value of a tech company. A reason for this to be trading under book value would happen if the return on equity (ROE) is below the cost of equity (COE). However from my calculation for the past five years has an average ROE of 31% and the current COE is 11%. So I don't see the reason for the undervaluation. As they continue to buy back stock and continue to grow both book value and earning I am confident they would come back to trade near book value. At the end of my valuation, I have estimated to trade close to its book value at around 34$, so I've entered the position at 24.4$