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Saturday, October 31, 2026

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When the liquidity does not add up

Arbor Realty Trust’s dividend suspension is presented as creating $60 million of liquidity, raising questions about its ability to meet 2027 debt maturities.

ABR $2.2B
John Hempton's Newsletter 3 clicks

From X

@ChrisCamillo 33 clicks

Chris Camillo on X

I’ve spent a few days thinking about the Tesla Roadster reveal and landed somewhere I haven’t seen much discussion. I’m neither a Tesla fanboy nor a Tesla hater. And I couldn’t care less whether what we saw technically qualifies as a flying car. Three takeaways: (1) The risk of that live demonstration going horribly wrong was real. Almost no CEO would willingly expose their company to that kind of public humiliation for a product with so little financial upside. Elon did. (2) That willingness to attempt the seemingly impossible is what makes Tesla special. It’s also arguably Elon’s greatest contribution to America. He’s helped bring back something we’ve lost. The American spirit of chasing big scary ideas that most people think are impossible. That mindset is spreading across a new generation of founders and its long term impact on America’s future could dwarf anything Tesla ever sells. I think this is deeply underappreciated. (3) Can we just acknowledge how insanely cool that moment was? We’ve reached a strange place culturally where even extraordinary feats of human ingenuity immediately become arguments about why they don’t count. Not everything needs to be a debate. Sometimes we should just be able to stand back together and marvel at what humans are capable of. I’ve been both bullish and critical of Tesla’s ambitions over the years. But watching Elon and his team push the boundaries of what’s possible reminds me why I’m glad we have him. Whether the Roadster ever makes Tesla a dollar or impacts $TSLA stock price is almost beside the point. We need more people willing to risk failure in pursuit of things the rest of us think are impossible. Because when they succeed we all win.
@calvinblissett

Calvin Blissett on X

Farmer Mac ($AGM) Upside: ~28% to ~$265. Assumes 2027 core EPS of ~$22 (Q2 run-rate excluding a one-time $7.4 million interest recovery, growing ~12%) at 12x. Farmer Mac is the government-sponsored secondary market for agricultural and rural infrastructure loans, the “Fannie Mae of the farm.” The stock fell 12% in February after a Q4 earnings miss and has not fully recovered. At $206.92, AGM trades at about 10.5x normalized core EPS and roughly 1.8x book value, for a business with a 19% core ROE and record Q2 core earnings of $5.40 per share (+24%). The underappreciated shift is in mix. Rural infrastructure is now one of the fastest-growing parts of the business: broadband volume grew 58% and renewable energy 55% in Q2, at net effective spreads of 2.30% and 1.72%, versus 1.01% on traditional farm and ranch loans. As higher-spread infrastructure lending becomes a bigger share of $37.2 billion in total volume, Farmer Mac’s spread should expand. Its GSE status lets it fund at near-agency rates. Tier 1 capital is a healthy 13.2%.
@calvinblissett

Calvin Blissett on X

Enova International ($ENVA) Upside: ~30% to ~$215. Assumes 2027 adjusted EPS of ~$19.50 (Q2 run-rate of ~$17 growing ~15%) at 11x. Enova is an online lender to non-prime consumers and small businesses. Shares fell from $227 to $167 in September after Enova withdrew its $369 million bid to acquire Grasshopper Bank, following opposition from 20 state attorneys general and two senators who argued the deal was designed to escape state rate caps. At $167.11, ENVA trades at about 10x annualized Q2 adjusted EPS of $4.31. The sell-off treats the bank charter as if it were in the earnings base, but it was option value; the core business is performing. Q2 adjusted EPS grew 33%, originations rose 27% to a record $2.3 billion, and net charge-offs improved to 7.3% from 8.1%. CEO Steve Cunningham stated that Enova’s “future growth and success do not depend on becoming a bank.” The episode also matters for peers: it shows charter acquisitions by non-bank lenders face real political resistance, a read-across for OppFi’s pending BNC National Bank deal. Enova repurchased $19 million of stock in Q2.
@calvinblissett 1 click

Calvin Blissett on X

Blue Owl Capital Corporation ($OBDC) Upside: ~34% total return. Assumes the shares re-rate to 0.90x NAV ($12.83, +22%) plus a ~12% dividend yield. Blue Owl Capital Corporation is one of the largest business development companies (BDCs), with a $15 billion portfolio of loans to sponsor-backed middle-market companies. The stock has fallen on contagion from its manager, Blue Owl, which gated redemptions at a retail credit fund and sold assets amid fears that AI will disrupt the software companies private credit lends to. At $10.49, OBDC trades at 0.74x NAV of $14.26 and yields 11.8% on its $0.31 base dividend, which is covered by adjusted net investment income of $0.34. A detail in the credit disclosures suggests the marks are already conservative: non-accruals rose to 2.8% at cost but fell to 0.8% at fair value, meaning troubled loans have been written down hard. With 73% of the portfolio in first-lien debt and leverage at a two-year low of 1.11x, the market price implies losses far beyond what the marks show. Every share OBDC buys back at a 26% discount adds to NAV per share, and it repurchased $35 million in Q2. The risk to watch is a shrinking portfolio: repayments ($747 million) outran new commitments ($319 million) last quarter.
@calvinblissett

Calvin Blissett on X

Encore Capital Group ($ECPG) Upside: ~30% to ~$124. Assumes 2027 EPS of ~$15.50 (2026 guidance midpoint of $13.50 plus the $1.00 non-recurring refinancing cost, growing ~7%) at 8x. Encore Capital is the largest buyer of defaulted consumer debt in the U.S., operating as Midland Credit Management, and in Europe through Cabot. The stock has more than doubled from its low, yet still trades at just 7x the midpoint of raised 2026 EPS guidance of $13–14 at $94.44. The less appreciated point is that Encore is a counter-cyclical business. Rising credit card charge-offs, the same trend that worries investors in lenders like OneMain, create more supply for Encore to buy at better prices. That’s why U.S. purchases hit a record $372 million in Q2 and collections rose 17%. Estimated remaining collections of $10.2 billion are about 2.4x its $4.2 billion of debt, and the May refinancing should save about $15 million of interest a year. Encore repurchased $27 million of stock in Q2, reducing diluted shares to 22.8 million from 23.6 million a year ago.

Investor Letters

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FTAI 3Q26: Aero margins in focus

FTAI’s Aerospace Products margin rebounded to 31% as CFM56 module output rose, while Power deposits and contracted deliveries fund its 2027…

FTAI $20B
Stock Thoughts 4 clicks

Microsoft's AI Boom Has A Cost

Microsoft’s Azure grew 48% as AI monetization accelerated, but doubled CapEx, largely for CPUs and GPUs, reduced quarterly free cash flow…

MSFT $3.9T
Yiannis Zourmpanos 2 clicks

CVX Earnings Review

Chevron’s Q3 revenue rose 35% to $65.2 billion and EBITDA 75% to $20.2 billion, while production trailed guidance and refining margins…

CVX $465B
Cestrian Capital Research 3 clicks

SNY Earnings Review

Sanofi raised FY26 guidance after Q3 sales grew 14.3% at constant currency, led by 34.8% Dupixent growth; vaccines declined 6.6%.

SNY $108B
Cestrian Capital Research 1 click
PSN · long

Parsons CORP

Parsons generates roughly half of its $6.4 billion revenue from Federal Solutions, serving defense and intelligence customers.

PSN $5.6B
Value Investors Club

AMZN Q3 FY12/26 Earnings Review

Amazon reported $201.9 billion Q3 revenue and 39% AWS growth, while $220 billion in 2026 capex drove trailing free cash flow to a $42.4…

AMZN $2.6T
Cestrian Capital Research 3 clicks

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