Pagaya: The Bull Case Depends On One Thing - Credit Loss Stabilizing

Bashar Issa7.13K FollowersFollow5ShareSavePlay(10min)Comment(1)SummaryPagaya has shifted focus toward risk management, sacrificing growth but improving profitability and balance sheet quality.PGY's loan-loss reserve stands at $359.4 million (44% of its fixed income portfolio), highlighting ongoing high credit risk.Despite a 45% YTD share price decline, PGY trades at a 4x forward adjusted P/E, presenting a speculative value opportunity if impairments subside.Management aims to double down on risk controls in 2026; a sector-average multiple could yield 100% upside if execution continues.Getty Images Investment Thesis In the previous article, I highlighted the shortcomings of Pagaya's (PGY) business model, arguing that it is not the AI loan underwriting disruptor many think it is, but rather a provider of a "second look" on loans thatThis article was written byBashar Issa7.13K FollowersFollowBashar is a contributing writer at Seeking Alpha, focusing on Long/Short investment ideas, with a geographic focus in North America. Before that, Bashar worked at an Investment Fund in the United Kingdom. He has a Master's degree in Finance from the Queen Mary University of London and a Bachelor's degree in Economics from Middlesex University.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.