ADAM

ADAM is a residential-mortgage REIT whose FY2025 swing from a $62M loss to $149M of net income was driven less by core earnings power than by mark-to-market tailwinds. The MD&A is explicit: $217M of net unrealized gains came 'primarily due to a decrease in interest rates, which impacted the pricing of our investment securities and residential loans,' partially offset by $58M of derivative losses on the same rate move and $65M of realized losses including write-downs and discounted payoffs on non-performing business-purpose bridge loans. Core net interest income did improve materially ($149M vs $84M), but a meaningful share of headline EPS is non-cash and rate-path dependent — exactly the kind of earnings that can reverse in a single quarter.

Read the full thesis with Pro →