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Arbor – Baloney with a side of flimflam

February 21, 2024 – On February 16th, Arbor announced 2023 earnings and held a conference call. Like many investors (or nasty short sellers), we left the call with more questions than answers.

  • Arbor CEO Ivan Kaufman claims that Arbor has substantially cured their delinquent portfolio, but refused to elaborate on how their almost-exclusively loss-making clients were able to cure those loans.
    • Arbor tenants have simultaneously cured ~$550m of delinquent loan values through simultaneous drawdowns on reserves. If we account for these “cured” loans, Arbor’s delinquencies have not decreased at all month on month: they have worsened.
  • Kaufman claims delinquencies in the CLO’s are in the 1%’s. This is objectively false. We believe Kaufman (intentionally or not) was referring to non-performing loans (>60 days overdue), not delinquencies (overdue accounts).
  • Arbor’s 10-K suggests there were only 4 loan modifications in 2023. We can see dozens of modifications to CLO loans in 2023, and various cured loans now in “workout”.
  • Arbor’s 10-K suggests that the value of <60-day delinquent loans is “only” $956m. This is false. Arbor fails to disclose that this figure only relates to delinquencies between 30 and 60 days.

The crux of the matter is Arbor clients’ use of loan reserves, workouts and modifications to offset borrower operating losses and service interest or extend timelines.

Kicking this can is not sustainable, especially as Arbor’s new business shrinks quickly. More to come on Arbor’s financials.


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