This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Adamas Trust Inc ( NASDAQ:ADAM ) reported its ninth increase in earnings available for distribution (EAD) over the past 10 quarters, with EAD growing 36% year-over-year to $0.30 per share, well above the increased quarterly dividend of $0.27.
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GAAP book value increased 1.8% and adjusted book value increased 2.3% in Q2 2026, marking the fourth consecutive quarter of book value growth despite a volatile market environment.
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The company expanded its investment portfolio by over $800 million to $11.7 billion, representing 36% growth year-over-year, driven by disciplined capital allocation and a record $632 million in business purpose loans sourced through its Constructive platform.
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Constructive, the vertically integrated origination platform, demonstrated strong performance with $428 million in originations, less than 1% delinquency on its BPL rental loans, and is on track to achieve a 15% annual ROE through identified cost savings and improved financing.
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The company's stock significantly outperformed the broader mortgage REIT index by approximately 46% on a total return basis over the past year, reflecting market recognition of its diversified strategy and narrowing discount to book value.
Negative Points
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Adamas Trust Inc ( NASDAQ:ADAM ) experienced a meaningful bear flattener of the Treasury curve during Q2, creating a challenging market backdrop that required active portfolio management.
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Higher interest rates at the end of the quarter led to $8.5 million in net unrealized losses on portions of the investment portfolio, including agency RMBS and certain residential loans.
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The company's estimated quarter-to-date adjusted book value was down approximately 2.3% as of July 28, 2026, indicating near-term volatility in equity value.
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Agency leverage increased from 7.8 times to 8.3 times in Q2, driven by higher investment activity and a larger TBA position, which carries higher implied leverage and risk.
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The multi-family portfolio wind-down is progressing slowly, with only one payoff in the core portfolio during the quarter, and the company faces uncertainty in timing of resolutions despite structural protections.
Q & A Highlights
Here are the key highlights from the Adamas Trust Inc ( NASDAQ:ADAM ) Q2 2026 earnings call.
Q: Can you discuss the current trends you're seeing in the Constructive business quarter-to-date, given the move in rates and competition? A: (Nick Ma, President) The pipeline at Constructive remains strong, with coupons in the pipeline higher than at quarter-end. We see a consistent level of desirable loans. Institutional demand has been surprisingly strong during this volatility, as the securitization market has provided consistent price discovery, giving whole-loan buyers confidence to bid aggressively. Higher rates mean higher coupons, which should lead to higher yields on a go-forward basis.
Q: You mentioned the opportunistic use of the ATM as you trade closer to book value. Where would you deploy that incremental capital and what are your targeted returns? A: (Jason Serrano, CEO) Across our platform, we are looking for 15%+ equity returns on capital. We have the flexibility to move between agencies and credit based on market opportunities. Currently, we see expanded ROEs on the credit side, making it a higher-returning, better risk-adjusted opportunity compared to agencies, where spreads have tightened.
Q: What is the updated book value quarter-to-date? A: (Christine Ario, CFO) We estimate that adjusted book value was down approximately 2.3% as of the close of business on July 28th.
Q: The pace of resolution on the multi-family book seems to have slowed. How are you thinking about the timing of resolutions and where that capital will be deployed? A: (Jason Serrano, CEO) We are seeing consistent payoff rates and a building pipeline of future payoffs. 93% of the portfolio has "drag-to-market" provisions, giving us control to bring assets to market. These assets are unlevered, so the capital that comes back will be redeployed into higher-ROE opportunities like residential credit, which we expect will provide an earnings pickup.
Q: The effective cost on your BPL securitizations appears to be going up. What is pressuring that? A: (Nick Ma, President) The primary driver is higher moving rates. While AAA spreads have widened slightly from their tightest levels, our most recent deal actually priced tighter than the broader market (125 bps vs. 130 bps). The vast majority of the cost increase is on the rate side, not the spread side.
Q: Regarding the relative attractiveness of residential credit, would you move incremental capital there or consider rotating out of agency positions? A: (Nick Ma, President) It is more on the incremental capital side. We expect the 56% capital allocation to agencies to remain relatively stable, with payoffs being reinvested back into agencies. The capital from the resolution of our non-core strategies will likely be rotated more into residential credit.
Q: How do you think about leverage as you continue to grow the portfolio and resolve the non-core assets? A: (Nick Ma, President) At 5.5 times, we are very comfortable with our leverage. We see an opportunity to slightly increase it over the year, primarily as the unlevered non-core assets roll off and are redeployed into leveraged strategies like residential credit or agencies. The increase is a function of the asset rotation, not a desire to seek higher leverage.
Q: Can you provide more detail on the cost savings initiatives at Constructive and the expected timeline? A: (Nick Ma, President) We have identified approximately $3 million of annual cost savings across the loan origination process. We also onboarded a new institutional loan financing counterparty that will deliver approximately 60 basis points of savings. We expect the implementation of these improvements to occur over the coming quarters, with the annual savings starting to flow through in the latter half of 2026 and into 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
