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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

Convequity on X

The AI build is moves more aggressively off the balance sheet Convequity’s debt scan across $MSFT $AMZN $GOOGL and $META: what these companies borrow in public is rising slowly. What they have promised to spend later — leases not yet started, equipment orders, contracted compute — is rising much faster. In 2Q26 that gap is the widest in four quarters. Off-book commitments are running toward +316% year-on-year. On-book debt is barely moving. If you only watch headline borrowings, you miss the cycle. MSFT is the clearest case. On-book debt +15% YoY. Off-book commitments +138%. That is why its all-in financing load is about 17x reported borrowings. Microsoft is under pressure from two sides: shareholders who want more AI spend, and shareholders who want less capex and faster returns. The compromise is to slow the capex it puts on its own books and lock in capacity from $IREN, $NBIS and other neo-clouds instead. How that works: IREN or NBIS borrows, builds the site and owns the chips. Microsoft signs a multi-year contract to pay for the capacity. Microsoft does not put the building on its balance sheet. It takes a future bill — rent and service payments that show up later as operating cost. Asset risk moves to the neo-cloud. Payment risk stays with Microsoft. GOOGL looks similar on a multiple and is doing something different. All-in commitments are 10.2x borrowings: $100bn of headline debt, $121bn including leases, $902bn off-book. $811bn of that off-book pile is purchase orders for its own stack — TPUs and the kit around them — not rented neo-cloud sites. On-book +190% YoY. Off-book +836%. That multiple is Google buying the factory, not renting it. META is closer to Google than to Microsoft: on-book +127%, off-book +680%. Some of Meta’s orders are reserved compute from CoreWeave and Nebius, which Meta will expense as it uses the capacity. Most of the pile is still Meta committing to build and buy for itself. AMZN is the most balanced of the four (+59% on-book / +80% off-book). Both lines are rising together. If the cycle breaks, Microsoft is less stuck with buildings and chips it owns. It is more stuck with bills it already signed. Google is more exposed because more of the capital is already spoken for on its own account. If compute gets scarcer, the extra megawatts IREN and NBIS have not yet sold can go to whoever pays more. Microsoft then has to wait or pay up. Because it owns less of the physical stack, it has less spare capacity it can simply switch on — which means higher compute costs and tighter margins. Powerful cycle. Not a broad bubble. The heat is in the promises, not the 10-Q debt line. Full AI Bubble Barometer available at Convequity.

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 $333M
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 $17B
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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