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Medallion Financial Corp. (TAXI) Message Board

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  • bufordbagsworth bufordbagsworth May 16, 2012 11:47 AM Flag

    Stock Offering

    The offering was announced this week and hit the market within a couple of days so everybody got blindsided. I was kicking myself for selling last week in the $11.40 range when it later ran to the $11.80. Better to be lucky than smart.

    Anyway when I saw the news pre-opening I placed about a dozen day orders ranging from $11.21 to $11.45. About half have filled and the rest are still open.

    Finally, I agree the stock should recover to the $10.70 - $11.00 range in the near term.

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    • The drop seems excessive. Sure, we should be upset that the offering was done at a steep discount to the market price, but why drop so far below $10.72? Are there concerns that the company can't put the money to good use? I may free up some cash if this price is available next week. TAXI is trading a little over 9 time earnings with a commitment to pay out 90% to shareholders. That seems lie a great buy to me.

      • 2 Replies to packerfan4life8512
      • The money will be used to retire 7% debt and for general corporate purposes.

        The issue was the size of the offering in relationship to the float and the fact that the market is risk averse.

        Bottom line I am buying right now.

      • I agree the shares are a value and am buying as well. As far as the price drop overshoot, I think we need to consider that TAXI is in a turd segment. Before this offering TAXI had decoupled from the financials because of it's simple steady balance sheet. The float had found steady hands that were content to check the quarterlies and buy dips while collecting a sweet dividend. This offering just tips the cart. This offering was BUNGLED! The bankers are supposed to work to place these shares in strong hands at a customary 7% discount but obviously they failed -too busy wringing their hands over FB! Now TAXI is is a falling knife -'whats wrong? What do they know that I don't?' So the unexplained value becomes a confidence breaker!

        I would load up, but I think I will save some powder for tomorrows open. I suspect some less attentive holders will be disturbed by today's trade and foolishly sell the open.

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