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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 4 clicks

From X

@convequity 2 clicks

Convequity on X

Anthropic's $518bn of planned compute obligations is about the same size as $AMZN's entire stack of debt, leases and purchase commitments. Convequity's ABBX barometer adds up borrowings, leases, purchase obligations and leases not yet started for each hyperscaler. On that all-in measure, AMZN and Anthropic are roughly level. 1. Against valuation, the number looks normal. At the $2 trillion valuation being debated, Anthropic's obligations are about a quarter of its value. That is close to $GOOGL's ratio and inside the range of the four big hyperscalers. 2. Against revenue, it is large but not extreme. Anthropic told investors its annualized run rate was above $65bn at the end of July. The obligations are about eight times that, spread over roughly a decade. A run rate is the latest month multiplied by twelve, not full-year booked revenue, and the hyperscalers fund their stacks from large, established cash flows. 3. Reuters reports that about 80% of the obligations are non-cancelable or payable regardless of usage, while many of Anthropic's largest customers are not on long-term contracts. I think the size is about right. It fits a $2 trillion company, and at the July pace Anthropic can grow into it. The risk is in the terms: most of the cost is locked in for years, while much of the revenue can leave at short notice. The number to watch now is how much of Anthropic's revenue is under long-term contract.
@StableBread

Fajasy on X

Elmet $ELMT expects Masan High-Tech Materials, its Vietnamese tungsten supplier, to stay its key refiner even after a U.S.-funded plant in Nevada comes online, and it bought 4.99% of the company for $124.75M on October 1. Masan High-Tech Materials (UPCoM: MSR) mines tungsten at Nui Phao in Vietnam, refines the concentrate into APT (ammonium paratungstate, the traded form of tungsten) and oxides, and calls itself the largest producer of processed tungsten outside China. Elmet, which turns tungsten into parts for U.S. missiles and jets, has bought from MSR for 12+ years, and the deal values MSR at $2.5B. The 55.1M shares came from a Masan Group (HOSE: MSN) subsidiary, so the $124.75M goes to MSR's parent, not into MSR. Along with the stake come (1) an MSR board seat, (2) an 18-month lockup on Elmet's MSR shares, and (3) 8+ years of supply that MSR puts at ~1,250 tonnes of WO₃ (tungsten trioxide, the standard measure of contained tungsten) a year, ~$1.5B of revenue to MSR at today's prices. That's ~$187.5M a year of spend with MSR ($1.5B / 8), equal to 82% of Elmet's $228.5M of TTM revenue. On September 14, Elmet's deck labeled ~$100M of the U.S. Department of War's (DoW) $450M "Strategic Investments in Elmet Refining & Trading," its new tungsten buying and trading division, to build a "diversified feedstock portfolio." The October 1 deck relabels the same ~$100M "Strategic Investment in Masan," and the stake cost $124.75M. At $2.5B, Elmet paid 10.7x the ~$233M of net profit MSR expects for 2026 ($2.5B / $233M). For context, APT was $3,040/MTU (metric ton unit, 10 kg of WO₃) on May 29, up from $330 in January 2025 per Elmet's deck, and Elmet's own 2031 targets assume $1,500/MTU. Elmet's 8-K also says it won't participate in MSR's 2026 interim dividends. On October 1, the day the shares traded, MSR's board proposed a second 2026 interim dividend of VND 5,000/share (Vietnamese dong). VND 5,000 is 8.5% of the VND 58,760/share Elmet paid, or ~$10.6M on its 55.1M shares. In September I wrote that Springer, the Nevada APT plant, gives Elmet the one step it didn't own: Turning tungsten concentrate into the oxide its powder line starts from. Elmet's deck calls MSR a "long-time supplier and processor of blue tungsten oxide (BTO)," so MSR already handles the conversion for Elmet. So the step Elmet didn't own in July stays with MSR, and Elmet paid 10.7x MSR's expected 2026 profit for its 4.99% while its own 2031 plan assumes APT at under half the May price.

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 $404M
The Oak Bloke 3 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 $20B
Stock Thoughts 5 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 $4T
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 $423B
Cestrian Capital Research 4 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 $114B
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 $5.3B
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 $2.9T
Cestrian Capital Research 3 clicks

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