We came across a bullish thesis on Pagaya Technologies Ltd. on Capitalist Letter’s Substack by Oguz Erkan. In this article, we will summarize the bulls’ thesis on PGY. Pagaya Technologies Ltd.'s share was trading at $24.13 as of December 1st. PGY’s forward P/E was 7.79 according to Yahoo Finance. Pagaya is positioned as a transformative player in the alternative lending space, bridging the gap between traditional lenders and investors willing to finance creditworthy borrowers that banks typically reject. ...

Group 1: AI's Impact on Financial Services - AI is a core driver of transformation in financial services, particularly in real estate lending, with over 85% of UK lenders deploying AI tools to enhance operations and decision-making [1] - The alternative lending sector, which now represents 41% of the UK market, raises questions about whether algorithms can replace human judgment and trust in underwriting [1][2] Group 2: Investment and Ecosystem Growth - There is a global momentum in AI investment, with significant capital inflows from the Gulf and Southeast Asia, and new tech alliances between the UK and US, indicating that investment in AI and quantum technologies is accelerating [2] - The UK's AI ecosystem is rapidly expanding, influencing real estate finance workflows [2] Group 3: Automation and Efficiency - Morgan Stanley's 2025 survey predicts that AI could automate up to 37% of tasks in commercial real estate, including valuation, underwriting, fraud detection, and covenant tracking, leading to significant efficiency gains [3] - Despite the potential for automation, concerns about data bias, privacy, and reliance on third-party vendors remain prevalent [3] Group 4: Regulatory Perspective - The FCA supports innovation in AI to enhance compliance and market protection, emphasizing the importance of transparency and accountability in AI applications [4] - AI can significantly improve fraud detection and compliance with anti-money laundering (AML) and know your customer (KYC) requirements, but must be used responsibly to avoid undermining fairness and governance [4] Group 5: Productivity vs. Complexity - For lenders, AI offers the potential to scale productivity while maintaining accuracy, which is essential for meeting rising demand and compliance [5] - Traditional lending practices align well with automation, while alternative lending requires a nuanced approach to complex scenarios, emphasizing the need for problem-solving and a genuine understanding of the counterparty [5]

Core Insights - Flow Capital Corp. reported strong financial results for the three- and nine-month periods ended September 30, 2025, highlighting continued revenue growth and increased cash flow generation [1][3]. Financial Performance - Total revenues for Q3 2025 reached $3.4 million, a 38% increase from $2.5 million in Q3 2024 [5]. - Operating income for Q3 2025 was $1.1 million, compared to $154,491 in Q3 2024, indicating significant improvement [4]. - Net income for Q3 2025 was $1.2 million, a turnaround from a net loss of $752,121 in Q3 2024 [4]. - For the nine-month period ended September 30, 2025, total revenues increased by 45% to $9.6 million from $6.6 million in the same period of 2024 [5]. - Recurring free cash flow for Q3 2025 was $735 thousand, up 15% from $637 thousand in Q3 2024 [5]. - Recurring free cash flow per share for Q3 2025 was $0.0244, a 17% increase from $0.0208 in Q3 2024 [5]. Investment Activity - Total investments value grew by 24% to $75.2 million from $60.7 million between September 30, 2025, and September 30, 2024 [2]. - New investments in Q3 2025 amounted to $4.0 million, compared to $10.3 million in Q3 2024 [5]. - For the nine-month period, new investments totaled $23.5 million, down from $25.5 million in the same period of 2024 [5]. Operational Highlights - Q3 2025 marked the ninth consecutive quarter of revenue growth for Flow Capital [3]. - The company generated strong recurring free cash flow of $2.5 million for the nine-month period, an 85% increase from $1.3 million in the same period of 2024 [5]. - The weighted average number of shares outstanding for Q3 2025 was approximately 30.1 million [4]. Conference Call - Flow Capital will host a conference call on November 14, 2025, to discuss these results, with details provided for participants [6].

Core Insights - LendInvest has issued 8.25% APY bonds, significantly higher than traditional savings accounts and CDs, amidst a backdrop of Federal Reserve rate cuts [1][4] - The minimum investment for retail bonds is £1,000 ($1,337), with increments of £100 thereafter, raising questions about the sustainability of such high yields [2][4] - The increase in LendInvest's bond interest rate from 5.25% APY in 2017 to 8.25% APY is attributed to a rise in the Bank of England's base rate from 0.25% to 4% [5][6] Investment Considerations - Retail bonds lack the safety net provided by bank accounts, as there is no guarantee of principal return if the issuer defaults [3] - Investors must assess the financial health of the issuer, as smaller companies carry higher bankruptcy risks compared to larger corporations [4] - The opportunity cost of investing in retail bonds is highlighted, as funds allocated to these bonds cannot be invested in potentially higher-yielding assets like index funds or growth stocks [6]

Core Insights - OppFi's customer-centric approach differentiates it in the alternative lending market, focusing on customer experience, trust, and financial inclusion [1] - The bank-partner model targets consumers with FICO scores below 650, expanding access to credit for underserved populations [2] - Advanced AI and machine learning have improved OppFi's auto-approval rate to 79% in Q1 2025, up from 73% the previous year, enhancing the application process [3] - Customer satisfaction is reflected in a 4.7/5.0-star rating on Trustpilot and an A+ rating from the Better Business Bureau, indicating strong credibility [4] - OppFi's Net Promoter Score (NPS) of 78 shows a loyal customer base willing to advocate for the brand, contributing to its reputation [5] - The U.S. alternative lending market is projected to grow at a CAGR of 25.4% from 2025 to 2030, positioning OppFi favorably for market share capture [6] Financial Performance - OppFi's stock has increased by 297.4% over the past year, outperforming competitors like PayPal (28.6% increase) and Paysafe (-26.8% decrease), while the industry overall has risen by 28.1% [7] - The company trades at a forward price-to-earnings ratio of 10.62, significantly lower than the industry average of 22.84, and compared to PayPal's 13.86 and Paysafe's 4.95 [10] - The Zacks Consensus Estimate for OppFi's earnings in 2025 is $2.38 per share, indicating an 11.2% year-over-year growth [12]

Core Insights - Flow Capital Corp. has successfully closed a US$5.0 million secured loan investment in a prominent US-based hospitality management company and technology platform, as part of a larger US$50 million senior secured unitranche loan transaction led by Beedie Investments Ltd. [1] - This transaction highlights Flow Capital's position as a preferred partner for high-growth companies in North America and institutional capital providers [2] Company Overview - Flow Capital Corp. is a publicly listed provider of flexible growth capital and alternative debt solutions, focusing on supporting high-growth companies since its inception in 2018 [5] - The company has financed businesses in the US, UK, and Canada, enabling them to achieve growth without the dilutive effects of equity financing or the complexities of traditional bank loans [5] - Flow Capital primarily targets revenue-generating, VC-backed, and founder-owned companies seeking between US$2 million and US$10 million in capital for expansion [5] Beedie Capital Overview - Beedie Capital is a multi-strategy direct investment platform managing alternative investments for Beedie, one of the largest private companies in Western Canada [3] - The platform employs a flexible, evergreen mandate and adopts an agnostic approach to the duration, structure, and size of its investments [3] - Beedie Capital focuses on sectors such as Technology, Tech-enabled Services, and Metals and Mining, aiming to grow its invested capital alongside the enterprise value of its investments [4]

Core Insights - Flow Capital Corp. reported a strong financial performance for Q1 2025, with significant increases in loan interest revenue and recurring free cash flow, indicating robust business growth and effective management execution [3][6]. Financial Performance - Loan interest revenue increased by 45% year over year to $2.9 million [6]. - Recurring free cash flow surged by 104% year over year to $847,111, translating to $0.028 per share for the quarter [6][7]. - Total assets grew by 13% year over year, reaching $74.1 million [6]. - The company deployed $3.2 million in new capital during the quarter [6]. Earnings and Shareholder Metrics - Total revenues for the quarter were $2.55 million, up from $1.91 million in the same period last year [7]. - Net income for Q1 2025 was $433,881, compared to $720,237 in Q1 2024 [7]. - Basic earnings per share decreased to $0.0142 from $0.0228 year over year [7]. - Book value per share increased to $1.22 from $1.18 year over year [7]. Company Overview - Flow Capital Corp. specializes in providing flexible growth capital and alternative debt solutions to high-growth companies, focusing on revenue-generating, VC-backed, and founder-owned businesses seeking $2 to $10 million in capital [10].

Core Points - Flow Capital Corp. announced a cash dividend of $0.069 per Series A Preferred Share, paid on May 2, 2025, to shareholders recorded as of March 31, 2025, corresponding to the period from January 1, 2025, to March 31, 2025 [1] - The dividend is classified as an eligible dividend under the Income Tax Act (Canada), allowing Canadian residents to benefit from an enhanced dividend tax credit [2] - Future dividend declarations will depend on the Company's financial performance, cash requirements, and other relevant factors as determined by the board of directors [3] Company Overview - Flow Capital Corp. is a publicly listed provider of flexible growth capital and alternative debt solutions, established in 2018, focusing on supporting high-growth companies [4] - The company has financed businesses in the US, UK, and Canada, enabling them to achieve growth without the dilutive effects of equity financing or the complexities of traditional bank loans [4] - Flow Capital targets revenue-generating, VC-backed, and founder-owned companies seeking between $2 million and $10 million in capital for expansion [4]

Core Insights - Flow Capital Corp. reported a strong financial performance for Q4 2024 and the full year 2024, highlighting significant growth in loan interest revenue and recurring free cash flow [3][9]. Q4 2024 Performance Highlights - Loan Interest Revenue increased by 44% to $2.7 million in Q4 2024 [9]. - Recurring Free Cash Flow rose by 61% to $545,591, translating to $0.018 per share [9]. - This quarter marked the sixth consecutive quarter of sequential growth in Loan Interest Revenue [3]. Full Year 2024 Performance Highlights - Total Loan Interest Revenue for the year increased by 31% to $9.3 million [9]. - Recurring Free Cash Flow for the year surged by 88% to $1.9 million, equating to $0.061 per share [9]. - Total Assets grew by 13% to $72.0 million [9]. - The company achieved a record $28.5 million in new capital deployment during the year [9]. - Book Value per share increased slightly from $1.19 to $1.20 [9]. Company Overview - Flow Capital Corp. specializes in providing flexible growth capital and alternative debt solutions to high-growth companies since its inception in 2018 [10]. - The company focuses on financing revenue-generating, VC-backed, and founder-owned businesses seeking $2 to $10 million in capital [10].

Core Viewpoint - Oportun Financial Corporation (OPRT) and Enova International Inc. (ENVA) are fintech companies focused on providing credit solutions to underserved consumers, leveraging advanced analytics and digital platforms to serve non-prime borrowers in the alternative lending sector [1][5]. Group 1: Company Performance - Oportun's shares have increased by 32.2% this year, while Enova's shares have risen by 2.1% [2]. - Oportun's total revenues are projected to be between $225 million and $230 million in Q1 2025, down from $250.5 million in the same quarter last year, with 2025 revenues expected to be in the range of $945 million to $970 million compared to $1 billion in 2024 [8]. - Enova's revenues have experienced a compound annual growth rate (CAGR) of 17.7% over the last five years [16]. Group 2: Revenue Growth and Strategies - Oportun has achieved a five-year CAGR of 10.8% in total revenues, with loans receivable at fair value and interest income growing at CAGRs of 8.1% and 10.8%, respectively [7][11]. - Enova's loans and finance receivables recorded a five-year CAGR of 48.6%, supported by its diverse lending programs and acquisition of OnDeck [21]. - Oportun's non-interest income has shown a CAGR of 6.4% over the past five years, indicating a growing revenue stream beyond interest [12]. Group 3: Financial Position - As of December 31, 2024, Oportun had cash and cash equivalents totaling $214.6 million and a debt of $69.1 million, indicating a strong liquidity position [14]. - Enova's cash and cash equivalents were $322.7 million, with a long-term debt of $3.6 billion and $944 million in available revolving credit facilities [22][23]. Group 4: Future Estimates - The Zacks Consensus Estimate for Oportun's 2025 revenues implies a year-over-year decline of 3.6%, while 2026 revenues are expected to rise by 8.4% [24]. - Enova's consensus estimates suggest a year-over-year revenue increase of 16.1% for 2025 and 15% for 2026, with earnings growth of 26% and 19% for the same years, respectively [28]. Group 5: Valuation Analysis - Oportun is currently trading at a price-to-tangible book (P/TB) ratio of 0.84X, which is higher than its three-year median, while Enova's P/TB ratio is 2.99X, lower than its three-year median [31]. - Oportun's stock is considered inexpensive compared to Enova, which may present a better investment opportunity [39]. Group 6: Investment Recommendation - Oportun's focus on community-based lending and expansion into new markets, despite near-term profitability challenges, positions it as a potentially better investment choice compared to Enova, which has a broader portfolio but may face risks from exposure to subprime borrowers [38][39]. - Oportun holds a Zacks Rank 1 (Strong Buy), while Enova has a Zacks Rank 2 (Buy), indicating a stronger recommendation for Oportun [40].