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Friday, October 30, 2026

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Lee Roach on X

Rayonier $RYN borrows at 2.29%. Their own 10-Q makes it look like 5.5%. The debt table lists every term loan at "a variable interest rate" of 5.2% to 5.9%. Take each loan's margin back out and you land on 3.62% every time, which is just where SOFR happened to sit on June 30. So that column is telling you about SOFR. It's not telling you anything about Rayonier. The real number shows up two pages later. All the term debt is swapped to fixed, and the swaps came over from PotlatchDeltic matched dollar-for-dollar to the loans they cover. On top of that, Farm Credit is a co-op, so it pays patronage refunds back to borrowers and those land directly against interest expense — $15.4M in six months. Term Loan M reads 5.32% in the table and actually costs 1.08%. Blended across all $1.86B: 2.29%. Which matters mostly for what it does to the other side. What they owe is a fixed number. It doesn't index to anything, doesn't adjust, just sits there. What they own is four million acres, and stumpage and land move with the price level. Let inflation run and one side climbs while the other stays put. Equity keeps the difference and the lender eats it. Timber makes that better than it'd be for most balance sheets, because the trees keep growing whether you cut them or not. Bad log market, you just don't harvest, and the inventory builds while you wait. Debt at 2.29% is what makes waiting affordable. Coverage is 8.7x on a 2.5x covenant, debt/cap 28% against a 65% cap — nobody's forcing them to do anything. It's not permanent. Fix averages about four years, so call it a real-rate edge through the back half of the decade. 2028 and 2029 are when it gets retested. But that's a 2029 problem the market seems to be pricing in 2026. Four million acres funded this cheap is worth more than they're getting credit for.

Investor Letters

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Another Haircut with Avy the Barber

SoFi’s stock case hinges on interest rates, tangible book value and private-credit loan sales after its $1.5 billion equity offering.

SOFI $21B
WHAT ARE WE DOING? “Contrarians At The Gate” 3 clicks

Twilio CEO: ‘Buy the dip!’

Twilio CEO Khozema Shipchandler urged investors to “buy the dip” after earnings sent the software maker’s shares down 17% after hours.

TWLO $33B
The Technology Letter 2 clicks

CoStar: 3Q26 Business Recap

CoStar’s 3Q26 revenue growth slowed to 14% as bookings fell to $37 million, while cost cuts lifted EBIT margin to 8.8%.

CSGP $13B
Speedwell Memos 3 clicks
RYZ · long

Ryerson Holding CORP

Ryerson Holding (RYZ) is a long position following its all-stock merger with Olympic Steel, at 1.7105 RYZ shares per Olympic Steel share.

RYZ $1.4B
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