Reviewing MidCap Financial Investment (NASDAQ:MFIC) & Pagaya Technologies (NASDAQ:PGY)

Pagaya Technologies (NASDAQ:PGY) and MidCap Financial Investment (NASDAQ:MFIC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

57.1% of Pagaya Technologies shares are held by institutional investors. Comparatively, 28.5% of MidCap Financial Investment shares are held by institutional investors. 47.6% of Pagaya Technologies shares are held by company insiders. Comparatively, 0.8% of MidCap Financial Investment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Pagaya Technologies has a beta of 5.35, suggesting that its share price is 435% more volatile than the S&P 500. Comparatively, MidCap Financial Investment has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Profitability

This table compares Pagaya Technologies and MidCap Financial Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pagaya Technologies	7.39%	44.75%	15.97%
MidCap Financial Investment	1.90%	10.86%	4.31%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Pagaya Technologies and MidCap Financial Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pagaya Technologies	1	0	8	3	3.08
MidCap Financial Investment	0	7	2	0	2.22

Pagaya Technologies currently has a consensus price target of $34.50, suggesting a potential upside of 108.85%. MidCap Financial Investment has a consensus price target of $11.54, suggesting a potential upside of 13.82%. Given Pagaya Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe Pagaya Technologies is more favorable than MidCap Financial Investment.

Valuation & Earnings

This table compares Pagaya Technologies and MidCap Financial Investment”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pagaya Technologies	$1.28 billion	1.07	$81.39 million	$1.07	15.44
MidCap Financial Investment	$22.82 million	36.59	$63.17 million	$0.04	253.38

Pagaya Technologies has higher revenue and earnings than MidCap Financial Investment. Pagaya Technologies is trading at a lower price-to-earnings ratio than MidCap Financial Investment, indicating that it is currently the more affordable of the two stocks.

Summary

Pagaya Technologies beats MidCap Financial Investment on 13 of the 15 factors compared between the two stocks.

About Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.