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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

@calvinblissett 1 click

Calvin Blissett on X

$TBBK: $46.75, $1.91B mkt cap, 8.2x trailing earnings and ~6.6x the new 2027 guide ($7.00-7.20), a 36% ROE, and 11% fewer shares than a year ago. $200M of buybacks this year, about 10% of the market cap. The Bancorp is the bank behind a lot of the fintech cards in your wallet. Fintechs bring the customers and Bancorp holds the deposits, which cost it almost nothing. Q3 EPS was $1.53, up 30%, fintech fees grew 19%, and payment volume grew 23% to $54B. The stock still fell 7.5% Friday because they cut the 2027 target from $8.10-8.30 to $7.00-7.20. In September Chime agreed to buy Stride Bank, its other partner bank, and the market read that as Chime eventually leaving. The bears have been loud and sometimes right. A VIC short in Dec 2023 at $38.93 called the earnings unsustainable and the accounting aggressive. On X, one guy called the guide-down "easy to call" before it happened, and others flagged the small business lending exit, layoffs, and a lending head leaving with a $2.5M package. But since that short the share count has gone from 54M to 41M, and the stock is higher. Even on the reset numbers you're paying ~6.6x 2027 and ~5.8x their preliminary 2028, and they plan to buy back ~100% of net income from 2027 on. Value Line cut it to Technical 5 on Friday, so nobody wants it. The whole question is how much Chime volume leaves. Management calls the new 2027 number a baseline, so watch whether it holds.
@calvinblissett 1 click

Calvin Blissett on X

$NTB: $56.15, $2.22B mkt cap, 9.8x trailing and 8.1x forward earnings, a 21% ROE, a 3.6% dividend, and 5.4% of the shares bought back in the last year. ~2.2x tangible book of $25.32. Butterfield has been banking in Bermuda since 1858 and also runs trust and wealth businesses in Cayman and the Channel Islands. Offshore deposits are sticky and cheap, and the trust business is a fee stream that doesn't care about rate cuts. Q3 core EPS was $1.58, flat with Q2, revenue beat at $161.9M, and tangible book dipped 3.3% on bond marks. gary9 wrote it up on VIC in 2017 at $33.94 and nailed why it stays cheap: "NTB screens as expensive on a P/B multiple, while the higher ROEs are dismissed due to a 0% tax rate." Nine years later the same thing is true. 2.2x tangible book looks expensive for a bank, until you see it earns 21% on equity and sends ~9% of its market cap back every year in dividends and buybacks. Value Line rates it Safety 2 with a Price Stability of 75, the steadiest name in the issue. The thing to watch is taxes. If Bermuda's global minimum tax ever reaches a bank this size, the 0% rate goes away, and so does part of the ROE.
@calvinblissett 1 click

Calvin Blissett on X

$EVER: $23.51, $828M mkt cap, $192M of cash and ~$2M of debt, ~$638M EV. $114M of TTM net income, $95M of FCF, 7.6x earnings, and a new $50M buyback. EverQuote is the site you end up on when you google "cheap car insurance." It sells those shoppers to Progressive, State Farm and thousands of agents. The business swings with the auto insurance cycle. When carriers are losing money they cut ad budgets to almost nothing, and when they're making money they spend. My favorite VIC find this week: Arturo wrote EVER up as a short in May 2023 at $6.31, calling it lead gen "that has no moat" that "seems to have lost momentum." He was probably right about the moat and very wrong about the cycle. Carriers repriced, got profitable and turned the spend back on, and the stock is up ~3.7x since. That's the whole game with cyclicals: buy them when the people writing short reports are making sense. On Oct 21 the board added a $50M buyback, ~6% of the market cap, and Hedgeye pegs it at ~4.7x 2027 EBITDA. The risk is the same as 2023, a soft auto market. But you're paying 7.6x earnings with 23% of the market cap in cash to find out.
@calvinblissett 1 click

Calvin Blissett on X

$UPWK: $9.15, $1.14B mkt cap, $614M of cash and securities vs $379M of debt, ~$907M EV. ~$204M of TTM FCF, an ~18% FCF yield, 7x forward earnings, and 5% fewer shares than a year ago. Upwork is where companies hire freelancers for code, design, writing, and more and more, cleaning up after AI. The market decided agents replace freelancers and took the stock down 46% in a year. The business is shrinking a little, not collapsing: last quarter GSV fell 4% and active clients went from 796K to 763K, but spend per client rose 5% to $5,230 and adj EBITDA grew 12% to $64M at a 33% margin. The best insight came from the CEO, not an analyst. Hayden Brown said requests like "turn my vibe-coded concept into a production website" and "humanize the translation output from this AI" are growing. felton2 wrote it up on VIC in Feb 2025 at $15.56 and called the AI fear the entry point. It's $9.15 now with more cash flow, and one guy on X summed it up: 16x forward sales in 2021, single-digit forward earnings in 2026. Management is acting like owners. They bought back $110M (8.3M shares) in the first half and have $254M left on the authorization, about 22% of the market cap. Value Line has it at Technical 5, so nobody is chasing it. If revenue just stops shrinking, you own a net-cash marketplace at 7x earnings that's eating its own shares.
@convequity

Convequity on X

Further thoughts on the $CBRS short-seller report I've already quote-tweeted this short-seller report, but I think it's quite funny. These days, a lot of tech short sellers seem to have a poor understanding of the technology itself. Perhaps they're better at timing market liquidity and identifying moments when sentiment is most vulnerable. Going back to the report's central claim, I think it's arguing that Cerebras hasn't adequately addressed the challenges of using a giant substrate to support an entire wafer, or of maintaining reliable connections across such a large chip. It's similar to the challenges facing $NVDA's Rubin Ultra. The idea is to connect four compute chips, with a combined size roughly eight times the reticle limit. At that scale, thermal expansion becomes a major issue, as does maintaining consistent communication between the chips. For Cerebras, these are certainly significant challenges. That's why it took so many years to turn the original idea into something that actually works. I would say the third-generation Wafer-Scale Engine, WSE-3, was the first generation to become commercially attractive. Earlier generations had lots of problems to work through, much like other chips, for example Google's TPU from v1 to v3. Even WSE-3 hasn't solved everything. One of the biggest remaining issues is parametric yield. The simplest way to explain it is that, when a chip spans an entire wafer, you can't guarantee that every part will operate reliably at the same high frequency. (Frequency is how many cycles per second the chip runs, so a higher frequency means more compute from the same silicon.) You therefore have to lower the operating frequency of the whole system. A normal chipmaker would cut the wafer into many separate dies and set each one's speed on its own. The argument is that those dies could then run at frequencies 50% higher, or perhaps even twice as high. Cerebras keeps the whole wafer as one chip instead, so it gives up some of the compute the same silicon could otherwise deliver. In return, it gets an enormous amount of compute and on-chip memory connected as one wafer-scale chip. Data moves between the cores over wiring on the wafer itself, rather than through slower, more power-hungry links between separate chips. That is what lets Cerebras serve AI models so quickly, especially for inference. That's the trade-off, and parametric yield has been a constraint for Cerebras. The workaround has been to lower the specifications and operating frequency, leaving enough headroom for the system to work reliably. But that also means leaving some of the wafer's potential unused, despite manufacturing it on an expensive, supply-constrained TSMC N5 process, and potentially on more advanced nodes in the future. That's why I find the latest CS-4 rack-level system, using the WSE-3T, interesting. My understanding is that WSE-3T uses the same wafer design as WSE-3 but delivers more than 50% higher performance. They've apparently found new ways to address the parametric-yield issue, allowing them to unlock frequency headroom they previously couldn't use reliably. It looks as though they're actively addressing the problem and making good progress. The earlier implementation may have been suboptimal, but even that version was already demonstrating commercial competitiveness. This is a common problem with short sellers today: they build a thesis around old information while the technology is evolving rapidly. They point to a technical limitation that may still exist, but fail to distinguish between a problem that makes a product unworkable and one that merely reduces its performance. Between roughly 2015 and 2021 or 2022, these issues may genuinely have been showstoppers. By late 2026, I don't think that's necessarily true anymore. They may still hold performance back somewhat, but they don't prevent the product from working. Meanwhile, Cerebras has the advantage of being the only company to have made a wafer-scale chip work. In my view, that benefit outweighs the remaining limitations. The short seller doesn't seem to recognize that distinction. I think this also explains why Oracle, AWS, OpenAI, and other companies have begun testing Cerebras chips this year. The technology seems to be reaching a point where these problems are largely, though not entirely, resolved. Previously, perhaps they were only halfway to a solution, and the product wasn't sufficiently practical. Now that they're much closer, large-scale commercial deployment becomes more attractive to customers. Of course, it remains to be seen how this plays out. They still haven't crossed the deployment threshold I have in mind, and once they do, we may see new problems emerge. For now, though, my sense is that these are well-known issues among people familiar with the technology. The short seller is largely repeating things that those people already understand. The more interesting question is the direction of progress: how quickly are the problems being resolved, and what does that mean for the product's competitiveness? The report doesn't really address that. The rest of the report seems to cover the usual short-seller material, raising fear, uncertainty, and doubt about adoption and other peripheral issues. But the central technical thesis strikes me as quite weak. It reminds me of previous short reports on companies such as $SMCI.

Investor Letters

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Verra veerer

Verra Mobility’s Avis termination threatens 2027 earnings, while Government Solutions profit rose 25% and implied fourth-quarter guidance…

VRRM $505M
The Oak Bloke 2 clicks

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 $16B
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 1 click

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 $5.4B
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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