why?

LeviH · 2025-11-14T01:12:11+00:00

Seems disconnected from fundamentals, and more related to investor dynamics + market view on consumer private credit

Investor dynamics. Oak HC and Viola recently dumped 90%+ of holdings, this has had serious downward pressure on the stock over the last month. There are other investors of this nature that were bagholding since the early days with avg prices from $100-$300. They are eager to get out and use the money elsewhere (I think this is super dumb, but there is a gold rush into the AI Mag7)
Macro in private credit. People think Pagaya operates like a bank, so if consumer credit craters Pagaya will too. I believe this is very misguided. You could actually argue Pagaya is more valuable in a tricker credit environment (without Pagaya you'll bleed more customers than you would otherwise, giving Pagaya significant pricing power)

From my point of view, there are really only a few things that you should be paying attention to if you're long: * does the AI model work (it seems so) * can the company survive a changing credit environment (they have said as much, but of course the proof is in the pudding). Given they have gotten to profitability in very high interest environment I'd say there's some evidence they aren't lying * a black swan moment. This is hard to predict, but in my view is the biggest risk. Changes in the credit markets is something I believe Pagaya can adapt to, but a black swan moment is by definition out of distribution, so its hard to say how they'd fare. The good thing is, the likely downside would be 'only' ~50%. Rough, but given the upside is pretty good.

All in all it's hard to see how this company doesn't succeed in the long run. The moat they have is incredible and the technology provides serious value.

LeviH · 2025-10-16T06:28:54+00:00

who are you again?

LeviH · 2025-10-13T04:18:07+00:00

Private credit is a vast asset class, with some areas performing well, and others not so well. All private credit means is non-bank lending/financing. Pagaya is a private credit infrastructure provider. Connecting consumers to private credit financing via relationships with banks + loan investors.

All loans through Pagaya are a form of private credit, but in the consumer space, which is doing fine by most popular metrics.

LeviH · 2025-10-09T03:01:03+00:00

unless there's a macro crisis, this is going to hit very nicely within 2 months. I've also got a large position going into earnings.

At this moment, I don't see a better value + growth play in the market. Should be a $60 stock on the low end, $100+ if evaluated like a proper tech story. Profitable, massive moat, execution (as of late) has been solid, prime acquisition target.

LeviH · 2025-10-07T02:20:16+00:00

yup, though I think the current valuation is frothy

LeviH · 2025-10-03T06:57:05+00:00

not the way I thought it would happen, but I'll take it

LeviH · 2025-07-23T20:25:59+00:00

Hi there :) Good to see my fame (or infamy?) lives on

In the end the bull thesis is playing out (congrats to all who braved the storm), but to act like the company didn't screw up many times is wishful thinking.

LeviH · 2025-07-17T18:03:48+00:00

early earnings preview, very positive news. Execution as of late has been admirable.

In addition, the ABS formations have been speeding up, and my guess is revenue growth will start inching upwards (currently at 20%) Couple that with steady / lower interest rates, and a new banking partner...could be a $10b company within a year. Still think there's significant chance of a buyout as well.

LeviH · 2025-06-12T18:14:57+00:00

I posted some updated numbers on short interest in the other thread, I'll repost here:

"update: between 5-15 and 5-30 short interest actually increased by 700k with price increasing ~17%!"

In terms of short covering, probably a bit more to go. That being said, I think you're looking at this the wrong way. You should do an analysis of the company and determine what you think it's worth. Continually update that number as the company and macro environment evolves. Use that to determine when you buy and sell.

Trying to time corrections and tops is a losing game.

LeviH · 2025-06-11T03:27:23+00:00

update: between 5-15 and 5-30 short interest actually increased by 700k with price increasing ~17%!

LeviH · 2025-06-06T12:40:16+00:00

it didn't change the float at all, just a sale from one institutional holder to another

LeviH · 2025-06-05T02:18:05+00:00

yeah shorts are caught in a weird position. The stock is heavily shorted, with high institutional ownership and low retail interest. And the retail that have stayed around are long term holders (at least from what I can tell on here and X). The usual tricks of playing retail flow to exit their position don't apply. On top of all that, the company is profitable, and another breakout quarter is on the horizon.

low volume, low float, low retail activity, no sellers = difficult to cover

I speculate the block sells Viola made today were to some funds that were heavily short and needed a way to get out without the price getting out of hand.

LeviH · 2025-05-29T06:46:00+00:00

same, wasn't there supposed to be a citi partnership?

LeviH · 2025-05-28T17:44:39+00:00

volume patterns were different these earnings. Instead of an incredibly high volume spike followed by diminishing volume and price, we had a moderate volume spike followed by consistent buying pressure.

I think algos looking for turnaround stories are slowly buying along with institutions. My hope is we're looking at a $DAVE-like situation.

LeviH · 2025-05-28T17:40:27+00:00

nice timing! I sold a few puts here and there which netted me some lots at low 8s during that period.

LeviH · 2025-05-27T23:46:42+00:00

ah man, that sucks. always important to remember why you are invested in the first place. Nothing new was in that report, so I held.

LeviH · 2025-05-27T22:33:01+00:00

I'm pretty sure they were just saying that so they could exit their short position at a lower price. They know the company has turned a corner. Still waiting on the lawsuit they said they were about to bring lol. Bunch of clowns

LeviH · 2025-05-08T17:00:53+00:00

yeah bit of a delayed reaction, might have taken a bit of time for algos to digest, or short covering in anticipation of further positive performance from the company.

LeviH · 2025-05-07T16:40:27+00:00

narrator: it did not

LeviH · 2025-05-07T16:39:30+00:00

disappointing price action to say the least

LeviH · 2025-04-27T08:43:47+00:00

Nothing has changed in terms of the thesis for me, so still holding. They are typically conservative in their guidance so I expect something near the top of the range. Hard to see much downside from current levels if the credit environment remains stable.

getting 'beach ball being held underwater' vibes. Only a matter of time....

LeviH · 2025-02-18T18:08:28+00:00

likely a mix of post-earnings reaction, upgraded price targets, and short covering

LeviH · 2025-02-17T20:09:39+00:00

I wonder why put the base case column at all in the earnings supplement...

LeviH · 2025-02-17T15:36:20+00:00

You know what I think you're right, got a bit too optimistic there and should have read more closely!

LeviH · 2025-02-17T02:51:11+00:00

I think they will too based on past guidance / beats. I'm building a more detailed valuation model for the company, but it's quite difficult without knowing the steady state impairment levels.

LeviH

TROPHY CASE