Model Portfolio

Pagaya’s current market price of roughly $24.80 implies an enterprise‑value to revenue multiple of just over two times and a price to free‑cash‑flow ratio near twelve, which is well below the multiples of its AI‑lending peers. The company posted a record $350 million in total revenue for the third quarter of 2025, a 36 percent year‑over‑year increase, while fee‑revenue less production costs climbed 39 percent to $139 million, reaching the top of management’s target range at five percent of network volume. Adjusted EBITDA margins expanded nine points to 30.6 percent and GAAP net income turned positive at $23 million, delivering a six percent net margin after a year‑ago loss of 26 percent. Operating cash flow hit a record $67 million, marking the first quarter in which cash generation exceeds investment outflows, and the refinancing of its revolving credit facility reduced annual interest expense by about $12 million. Beyond the numbers, Pagaya is benefitting from a suite of growth catalysts that the market has not yet fully priced in. The launch of the Prescreen solution and the Affiliate Optimizer Engine is converting the platform from a passive decline‑monetization tool into an active customer‑acquisition engine, with multiproduct partners now accounting for a third of lenders but generating more than two‑thirds of loan volume. Asset‑class diversification is accelerating; auto loan volumes have risen to a $2.2 billion annualized run‑rate and point‑of‑sale financing now represents 32 percent of total volume, up from 9 percent a year earlier, providing higher‑margin, lower‑loss streams. Forward‑flow agreements with Blue Owl and Castlelake lock in $2.4 billion and additional billions of capital, respectively, reducing reliance on volatile asset‑backed securities and allowing the company to fund growth at a cost 200 basis points lower than before, as evidenced by the $500 million bond issuance at an 8.88 percent coupon. Together, the sturdy profitability metrics, superior capital structure, and expanding product‑led revenue engine suggest that Pagaya is trading at a significant discount to its peers and has ample room for multiple expansion as the market recognizes the durability of its transformed, capital‑light business model.

Danaos is trading at a stark discount to its own balance sheet, with a price‑to‑book multiple of just 0.48x versus an industry range of 0.73‑0.97x, suggesting the market is pricing in severe distress despite the company’s fortress balance sheet. At $97.03 per share the firm has a market capitalization of $1.78 billion and an enterprise value of $1.82 billion, yet it holds $971 million of liquidity and a net‑debt‑to‑adjusted‑EBITDA ratio of only 0.23x, down from 0.40x a year earlier. Net debt fell from $291 million at the end of 2024 to $165 million in September 2025, while the backlog of contracted revenue grew from $3.4 billion to $4.1 billion and the average charter term lengthened from 3.7 to 4.3 years, providing roughly 100 % coverage of operating days for 2025 and 95 % for 2026. The earnings multiples also reflect a mis‑pricing; a trailing P/E of 3.86x and a forward P/E of 3.53x imply investors expect a 70‑plus percent earnings collapse that the current cash‑flow profile does not support. The undervaluation is further amplified by several growth catalysts that are not yet baked into the share price. Danaos has locked in 15 new‑build containerships slated for delivery between 2026 and 2028 at trough‑cycle rates, including six 1,800‑TEU vessels with ten‑year charters and a 6,000‑TEU vessel on a five‑year charter, effectively securing profitable earnings for the next decade while competitors are forced to buy at higher spot prices. The modern fleet, equipped with energy‑saving devices that shave $2,000‑$3,000 of fuel cost per day per vessel, gives Danaos a cost advantage that can be translated into higher net margins even when charter rates are depressed. In addition, the modest dry‑bulk Capesize exposure—less than 5 % of assets—acts as a free call option on any resurgence in Chinese iron‑ore demand, offering upside with minimal balance‑sheet impact. The combination of a deep, long‑dated charter backlog, abundant liquidity, low leverage and a disciplined counter‑cyclical expansion positions Danaos to capture the upside when industry capacity tightens, while the current market price leaves little room for downside, making the stock a compelling value proposition.

Huntington Bancshares appears markedly undervalued when judged against its earnings, book value and cash‑flow generation. The stock trades at roughly 11.6 times trailing earnings and only 1.24 times tangible book, a stark discount to peers such as Fifth Third (13.1 × earnings, 1.5 × book) and KeyCorp (22.8 × earnings). Its price‑to‑free‑cash‑flow ratio of 9.1 × is likewise attractive given the bank’s robust cash‑flow profile and a 3.75 % dividend yield that returns more than 45 % of earnings to shareholders. Credit quality remains exceptionally strong, with net charge‑offs on an annualized basis at just 22 basis points—down from 30 basis points a year earlier—and a modest allowance for loan losses of 1.86 % of total loans. The balance sheet is well‑capitalized, with a CET1 risk‑based ratio of 10.6 % and adjusted CET1 comfortably within the 9‑10 % target range, leaving ample headroom for continued growth and share‑return programs. The bank’s growth trajectory is being amplified by two transformative acquisitions that will add $66 billion in assets and $55 billion in deposits, instantly expanding scale and creating sizable revenue synergies. The Veritex deal, closed in October 2025, is already contributing an estimated $20 million of core pre‑provision net revenue in the quarter—a full penny of EPS—and is projected to lift the efficiency ratio by one percentage point and ROTCE by 30 basis points. The pending Cadence acquisition, valued at $7.4 billion, will make Huntington a top‑10 player in Alabama and Arkansas and the largest bank in Mississippi, providing an additional $53 billion of assets and a deep deposit franchise. Together with a 15‑basis‑point increase in FTE net interest margin to 3.13 % in Q3 2025 and management’s guidance for at least another 10‑basis‑point expansion in 2026, the bank is positioned at a clear NIM inflection point. Moreover, Huntington’s “people‑first” relationship model has generated a 37 % cumulative deposit beta, outpacing peers and supporting margin expansion even as rates fluctuate. The launch of an API‑first Treasury Management Connectivity Ecosystem further diversifies fee income and deepens commercial client stickiness, providing upside that is not yet reflected in the current share price. In sum, Huntington’s low valuation multiples, pristine credit metrics, strong capital position and a clear path to higher earnings through strategic acquisitions, margin expansion and technology‑driven fee growth create a compelling case that the market is undervaluing the bank. The combination of solid cash‑flow generation, a generous dividend yield and a sizable pipeline of integration‑related synergies suggests a sizeable upside potential for investors who can tolerate the modest execution risk inherent in the dual‑integration process.

Cheniere Energy’s valuation appears compressed despite a portfolio that generates cash flow with the predictability of a bond. The company is delivering a 49‑plus percent return on equity while sustaining an operating margin north of 40 percent and a net margin above 20 percent, figures that are rare in capital‑intensive energy businesses. For the nine months ending September 2025, revenue rose to $14.5 billion and net income climbed to $3.03 billion, even though natural‑gas feedstock costs surged by $2.6 billion, underscoring the strength of its toll‑road model. Its enterprise value relative to EBITDA is trading well below the 6‑to‑7‑times capex‑to‑EBITDA hurdle that management uses to approve new projects, meaning the stock is priced at a discount to the internal benchmark that justifies growth spending. With $9.1 billion of liquidity, $7.7 billion of which is undrawn credit, and a debt‑to‑equity of roughly 2.3 times that remains serviceable under investment‑grade ratings, the balance sheet provides ample runway to fund expansion without diluting shareholders. The growth story is anchored by the rapid execution of Corpus Christi Stage 3, where the first three trains reached substantial completion ahead of schedule and at half the original commissioning time. This acceleration is already adding roughly $500 million of incremental revenue and is expected to lift production to 51‑53 million tonnes in 2026, the first year the company will exceed the 50 million‑tonne threshold. Destination‑flexible contracts further differentiate Cheniere, allowing it to redirect cargoes to the highest‑value markets when geopolitics shift, a capability demonstrated during the China tariff episode. The company’s share‑repurchase program has removed about 14 million shares for $2.25 billion, shrinking the float to roughly 217 million shares and delivering accretive returns at a price below its own project hurdle rate. Coupled with a dividend that has grown 70 percent in four years and a pipeline of brownfield expansions that could lift capacity to 75 million tonnes by the early 2030s, the market’s current pricing does not fully reflect the combination of high‑margin cash generation, disciplined capital allocation, and a durable, contract‑backed growth pipeline.

Armada Hoffler (AHH) appears dramatically mis‑priced because the market is still discounting the shift from a mixed construction‑fee model to a pure‑play REIT focused on stable, recurring property income. At its current price of roughly $6.92 per share the stock trades at just 6.6 times the midpoint of the 2025 normalized FFO guidance of $1.05, a multiple that is a full 40 percent below NAV and far beneath peers such as Federal Realty (≈25 × earnings) and Regency Centers (≈31 × earnings). The dividend yield of 8.15 % looks high, yet the payout is modest—about 54 % of the FFO midpoint—leaving ample cushion for shareholders and indicating that the yield reflects a valuation discount rather than extraordinary cash flow. Balance‑sheet metrics reinforce the case: unsecured debt now represents 60 % of total borrowings, the debt‑to‑equity ratio sits at 1.9 ×, and the company holds $46.5 million of unrestricted cash, all of which provide financial flexibility that peers lack. Beyond the low valuation, AHH’s growth catalysts are both tangible and under‑appreciated. Management has already backfilled 115,000 sq ft of vacated retail space at rents 25‑33 % higher, and a marquee re‑configuration is set to lift rents by more than 50 % at Columbus Village. Occupancy remains robust—96 % overall and 96.5 % in the office segment—while lease‑up spreads of 21.6 % in office and 5.7 % GAAP releasing spreads in retail demonstrate pricing power that most competitors cannot match. The multifamily pipeline adds a clear inflection point: 900 new units are slated to stabilize by mid‑2026, expanding the door count by about 37 % and expected to lift 2026 normalized FFO toward $1.20‑$1.25. Together with a low‑cost $115 million senior unsecured note issuance at a 5.86 % blended rate that reduces reliance on property‑level mortgages, these dynamics should drive earnings momentum and support a re‑rating toward a 12‑15 × FFO multiple, implying 80‑130 % upside even without any operational improvement. The market’s focus on the near‑term earnings trough therefore creates a compelling value opportunity for investors who can see the longer‑term upside baked into AHH’s high‑quality assets, superior occupancy, and disciplined balance‑sheet strategy.

Cryoport’s valuation appears dramatically compressed when measured against its fundamentals. The company trades at roughly 0.29‑times enterprise value to revenue while holding a net cash position of about $421 million, effectively giving it a cash‑rich balance sheet and negligible leverage. Revenue from continuing operations grew 15 % year‑over‑year to $44.2 million in the most recent quarter, and gross margins expanded to 48.2 %, driven by a shift to higher‑margin life‑sciences services that now deliver 49.7 % margins. Adjusted EBITDA, which was a $10.5 million loss in the first nine months of 2024, has narrowed to a $0.6 million loss in Q3 2025, with operating cash flow turning positive at $2.2 million. These trends signal a clear path to profitable EBITDA by the end of 2025 or early 2026, yet peers in the life‑sciences services space command valuations multiple times higher despite Cryoport’s superior cash generation and margin trajectory. The undervaluation is further underscored by several catalysts that are not yet fully priced in. Cryoport supports 745 clinical trials—including 83 in Phase 3—and 19 commercial cell‑ and gene‑therapy products, giving it exposure to roughly 70 % of the global pipeline. With an estimated $2–3 billion addressable market by 2030 and a sector growth rate of 20‑25 % annually, the company is positioned to capture a disproportionate share of commercialization revenue as therapies transition from trial to market. Proprietary assets such as the Cryoportal logistics platform, ISO 21973 certification and the newly launched IntegriCell cryopreservation service create high switching costs and enable premium pricing; IntegriCell alone is projected to achieve 60 % margins and generate “hockey‑stick” revenue growth after 2026. The recent $195 million divestiture of a low‑margin courier business and the strategic partnership with DHL have sharpened Cryoport’s focus on high‑return services while bolstering cash reserves, providing a durable competitive moat and a clear runway for margin expansion. Taken together, the combination of deep cash, accelerating top‑line growth, strong profitability trends, and a robust pipeline of high‑margin services makes Cryoport substantially undervalued at current market levels.