ADAM reports tomorrow against a backdrop of quietly rising short interest, options skewing decisively toward calls, and a stock that has given back 8% over the past month — a combination that makes the earnings setup more charged than the modest short position alone might suggest.
The options market is the most striking signal right now. Put/call ratio has collapsed to just 0.09, well below its 20-day average of 0.13 and near the lower end of its 52-week range. At 1.4 standard deviations below the mean, that's an unusually call-heavy book for a mortgage REIT heading into a quarterly print. In plain terms, options traders are not hedging here — they are positioned for the stock to move up. The contrast with the recent price action is notable: ADAM closed at $8.71, off 8.4% over the past month.
Short interest is rising but nowhere near alarming. Bears have added exposure this week — SI climbed roughly 17% over seven days to 3.3% of the free float, around 3 million shares short. That follows a dip in mid-July when positions briefly fell below 2.5 million shares, so the current level simply returns shorts to where they were at the start of the month rather than representing a fresh wave of conviction. The borrow market confirms the picture is relaxed: cost to borrow has dropped nearly 44% this week to just 0.29%, a multi-month low. Availability is extraordinarily loose at over 1,250% — meaning the lending pool holds more than twelve times the volume currently borrowed — so there is no mechanical squeeze pressure whatsoever.
The fundamental setup heading into the print has a couple of genuine highlights. ADAM's EPS surprise score ranks in the 91st percentile, meaning the company has beaten consensus estimates more reliably than almost any other name in the database. The most recent earnings history adds colour: the April 30 release delivered a 14.7% one-day gain and held 12.5% of that over the following week. The June 11 print was milder, gaining 3.6% the next day and fading slightly over five days. Price-to-book runs at 0.87x and the P/E has compressed to around 7.9x — both below the kind of multiples that would make a beat unrewarding. The short score of 38.5, which ranks in the 40th percentile, is consistent with modest rather than aggressive bearish positioning. A recent ORTEX note flagged that economic return surged 121 basis points to 462bp last quarter, with the dividend lifted to $0.23 per share, though potential Fed rate cuts remain a headwind on prepayment and reinvestment dynamics.
The peer group ended the week mixed. RITM was the standout, gaining nearly 7% on the week. NLY added 2.4%. By contrast, MITT fell 2.4% and BRSP lost 3.1%, underscoring that the mortgage REIT sector is not moving as a bloc. ADAM's own 1.6% weekly decline puts it closer to the laggard end of that peer distribution heading into the print.
The key variable tomorrow is whether the economic return and dividend story from last quarter has continued to build, or whether the rate environment has begun to bite — options traders are betting on the former, while the modest short rebuild suggests at least some investors want protection going in.
See the live data behind this article on ORTEX.
Open ADAM on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
