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Corrections Corporation of America Message Board

ALarriva 2 posts  |  Last Activity: Nov 28, 2014 10:09 AM Member since: Apr 14, 1998
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    by eagleeyes4utoo Nov 28, 2014 2:12 AM
    alarriva alarriva Nov 28, 2014 10:09 AM Flag

    Collapse is a big word, but prices are clearly not going up. TAXI has more exposure on these medallions to a reduced loan book than reduced prices in my opinion. Yes, lease rates are down and medallion prices are down, and probably LTV's on them are going to be down to cut risk. But, overall income should hold up. The loans are margined based on sales price, so if people aren't paying and prices are down on the medallions, they can be sold off. It's a risky position for the operator because if medallions drop to much theirs get sold off. The risk might be that you have too many sold at one time which pushes the price way down and then which causes more medallions to be sold off.

    Uber is pushing to gain share in NYC, but I think that they are wrong here. There are cabs everywhere -- it's too easy to just put your hand up and get into one. In LA they will do better -- cabs are harder to find and you typically have to call one at lower volume locations. Price probably matters a bit. But, there is a cost to everyone to operate and I think UBER's value could be overstated -- especially in these major markets.

    Then again, my bet is on the side of TAXI and marginally medallion values. Values will be flat to down, but on the flip side, you have UBER currently giving away so much to take share. It's a lot more "useful" when I have a $20 coupon than when I don't.

  • alarriva alarriva Nov 27, 2014 1:36 PM Flag

    TAXI has a bank, and the bank has leverage at a much higher level. That brings their overall leverage up. The bank has a bunch of less than great assets (well, maybe they are great because they yield high, but ... loans on boats and RV's aren't secure). I believe that they are limited to 3 to 1 on the bank side. And then becauase they are a BDC the bank is limited to a certain share of assets. 25% perhaps.

    I sold all of my shares around 14 on the way up. This wasn't (and isn't) a $14 stock or a $17.50 stock. But, at $10.78 this is a great deal. I have about a 12% position in TAXI at the moment, and might expand a bit further if I can find something else to sell.

    I think you are going to see UBER do very well in less dense markets where you can't find a cab. In Scottsdale, for instance, UBER seems like a nice alternative. There is no cab close by, UBER does have slightly better drivers, my phone actually works (try using UBER in NYC or Paris from some hotel room on the 20th floor -- it doesn't work). So, the less traffic there is, the better UBER is going to do. But, the more density you have the worse UBER is going to do.

    I don't see UBER taking down Medallion values. Perhaps it creates a bit of a stall, but you want licensed and regulated carriers staffing the "hop into my car" market. And, it's much easier to just hop into a car in NYC, Boston, San Francisco, or Chicago. But, in Scottsdale at my house 3 miles from a major road -- yeah, I bet UBER takes 25% of the market.

    TAXI is probably my best idea right now. Lots of dividend, good coverage ratios on the medallions, share buyback, and a growing book value so your actual income is greater than the dividend. It's probably a 10+ ideally assuming that people don't bid it back up to 8% where it belongs -- at about $13.50 a share.

    Sentiment: Strong Buy

39.77+0.51(+1.30%)Jan 29 4:05 PMEST

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