UBER loses another $700 million as they continue to "compete" for market share against the taxi industry. Maybe, it would have been cheaper for them to buy the medallions and retire them.
Here is how I think of MFIN. I think that consumer and mezzanine loans are in good shape and correctly valued. Medallion loans are now valued 450 MUSD. Medallion cash prices are about 10-20% of peak values a few years ago. So I think, that minimum value of medallion loans are about 10-20% of book value. Because most of the loans are current and cash flows about 15 MUSD per year so I would use a little higher number than minumum value, I think everyone would agree, that medallion loans are at least worth 100 MUSD. Of course there is no need to make a big write-off now because as most of the loans are current so let's lenders pay there amortizations and interests. Also there has been many improvements for taxi-companies, they have better mobile application now and ride-share is allowed. Those improvements will keep taxi companies alive and medallions will have markets because medallion taxis have some privileges too like taking passengers from street without pre-order and they can get tax benefits for 15 years when buying new medallion. MFIN makes about 40 MUSD with consumer loans per year and that business is growing. MFIN can easily pay 10% dividend because market cap is only 60 MUSD so 10% is 6 MUSD per year which is very little money compared to 40 MUSD. So even after dividend they have the money to support growing consumer loans. It takes only 1,5 years to make market cap with consumer loans' profit. In 5 years that would be 200 MUSD. In 5 years also medallion loan exposure would be at least about 50 MUSD less and those loans would still have that 100 MUSD minimum value. So that would mean 250 MUSD more to own equity. That would mean 250 MUSD / 60 MUSD (market cap now) = 4 times more. That would be about 80% growth each year. Maybe there will be bumps on the road so maybe share price doesn't grow 80% per year at least during first year but as this consumer loan business is growing and profitable and taxi companies keep improving there business so I'm counting about 30-40% growth per year and some dividend too.
Nice quarterly call. While I'm sure the shorts will have some interesting spin it seems like the company has corrected or is correcting every issue the shorts ever had. Now management is building the company, further reducing the portfolio of medallions and making money. Interestingly, the short position remains unchanged. I wonder when they'll begin to cover?
Though my opinion isn't worth much with this sort of company, I have to say I was reassured by the CC. This guys seem committed, competent, positive about their future prospects and genuinely transparent. I think the worst of the medallion meltdown is behind us. I'm actually more nervous about their consumer loans- low to mid-teens on RV loans is great in this economy. Despite the borrowers' great credit, things in that space can change quickly if the economy heads south. But overall, I liked what I heard.
The next major uptick in the price of MFIN should be the day it announces the sale of a portion of its bank. Any guess on how much cash it will receive?
Something should be said about Jay (Hickman) and his purported "analysis". This is apart from his credibility issues and background. (As has been documented here already, he doesn't actually work at a hedge fund, he failed to deny that he violated securities law when he had the chance to do so, and he was sanctioned by the securities law authorities.) It would take too long to go exhaustively through Jay Hickman's rants, so we should focus on what's perhaps his most fundamental mistake.
Jay Hickman and his pet Gordon carry on and on about "arm's length" transactions and the book value of MFIN. These are really distractions. There is no efficient market in taxi medallions. It's not like you can bring up your brokerage app and put a limit order in for two NYC medallions.
The right way to analyze MFIN is to understand that taxi medallions are relatively illiquid assets with limited marketability. Imagine that MFIN actually did what Jay Hickman suggests and wrote down the value of its medallion loans. (There is also something to be said for how Jay Hickman focuses only on that part of MFIN's business.) Such a write-down would raise the specter of problematic accounting. Why?
A taxi-medallion loan produces income. The cash flow generated by them is what's important. Uber/Lyft have by now shot their wad. The important thing for addressing MFIN is to look at their ability to service debt and turn a profit given their revenue streams. MFIN's debt is somewhat high.
Jay Hickman, who doesn't address whom his clients are or who pays his bills or why he's on such vendetta against MFIN tries to obscure the issue with. To see this perhaps most clearly, imagine that the book value of medallions goes up 10,000% but that their marketability remains invariant. According to Jay Hickman, MFIN's value should get written up (instead of down) and substantially so. But what's actually important to a bank from a loan for a relatively illiquid asset is its value as a revenue stream, which wouldn't change (for most loans). Or, think about what happens when Bank lends me money to buy a shrimping boat, the S.S. Jenny. Due to a storm, all of the other fishing boats are destroyed, and the book value of my S.S. Jenny encumbered by the loan skyrockets. But Bank isn't getting any more cash flow from this particular revenue stream.
Then we have Jay Hickman's massive credibility issues, thin skin, and name-calling. I won't dwell on these issues, but they are covered in other posts. Most unusually, Jay Hickman keeps on citing Jay Hickman as the sole authority for his assertions, but then he become irate when Jay Hickman's credibility or objectivity is challenged.
Funny thing: Jay *deleted* his original post about NYC July medallion transfers and all comments thereto; he has now re-posted the original post, scrubbed of all comments. Guess he couldn't take the heat, especially when he was confronted with the gaping flaws in his analysis, to say nothing of his serial misrepresentations and the gaping holes in his stories.
Whom does Jay Hickman work for? Who's paying his bills? And why, if MFIN is in such bad shape, did Jay Hickman not short-sell its shares?
Callin' all savvy people. Transfer code P (Open market or private purchase of non-derivative or derivative security) Is listed on several SEC fillings listed on the medallion.com website. This looks like a lot of insider buying. Please take a look at the website>Investor relations>SEC Filings> Click on Documents for "STATEMENT OF CHANGES OF BENEFICIAL OWNERSHIP OF SECURITIES" between 6/7/17 to 7/22/17. Am I correct???
Uber Plans Sale or Consolidation of Car Leasing Program
Uber Technologies Inc. is trying to unload its costly U.S. subprime car-leasing program.
I am reposting the response to comments by Mr. Gordon and Mr. Jay. Everyone is welcome to answer my questions below.
"I read somewhere that TAXI started out as a family owned business. The insiders still own a lot of the shares. It seems logical that they will try to make the company be profitable. It is commendable that they hire outside experts for assistance. Moreover, it seems to me that someone would not join as a director if he sees MFIN is a basket case.
The shorts are correct to short TAXI when the impact of Uber is noticeable. But MFIN has changed.
@Gordon and @Jay, since you two seem to be experts of MFIN, how about walk me through a financial analysis. Assign a value which you think is correct for the medallions on the books, assign a value on the other subsidiaries, such as the bank, and show me what you think the book value of MFIN should be.
Also, show me a financial analysis about the earning power of MFIN. Does MFIN make money, or the books are totally cooked?
New independent director joined the board, a good sign.
NYC July transfers are out - 7 FORECLOSURE transfers between $400K and $580K, undoubtedly all cashless assumption of mortgage under terms related to "buyers" ability to pay rather than risk profile of asset as previously documented, two arm's length at $180K and $210K (likely all cash deals); and two sets of mini-fleet transfers involving 50% shares at $400K and $345K, equal to those same values on a per medallion basis. These ugly numbers comport with the June trips and farebox data both showing y-o-y comps in NYC were worse in Q2 than any prior quarter.
Met capital ratios again. Looking forward to the Q report. No time to compare call report with last q, will check later. GLTA
Murstein has refused to acknowledge the massive drop in medallion values as of March 31, 2017.
Let’s see the extent of his lie for values as of June 30, 2017 to be released in a week.
Values used by Murstein as of March 31, 2017 compared to ACTUAL values on June 30, 2017:
New York: $500,000 instead of $150,000 Chicago: $60,000 instead of $45,000 Boston: $300,000 instead of $50,000
Only 37,143 shares covered in last 15 days. DTC almost 100 days!! Bank is making bank outside the medallion lending, shorts made money (if they covered), but the thesis of the stock price going to zero is only a wish now. 6.4 million shares short on this stock has distorted the pps at this point. Just a waiting game now. GLTA
Despite stellar results reported by MFIN the share price remained depressed. The shorts increased from 6.01 millions shares in May to 6.48 millions shares in June. It is only in the last several days that the shorts started to cover, buying back 300k shares and resulting in a share price increase of about 13%.
The shorts still maintained that MFIN is worthless because of the collapse in medallion value and its impact on MFIN. That is totally BS. The value of medallion has been aggressively marked down and is now only 35% of MFIN's assets .
It will be very painful for the shorts to cover the remaining over 6 millions shares because MFIN is getting stronger as time goes on.
Let us look at why MFIN should be worth much more than the current stock price,
1. The German bank not only renewed it loan but INCREASED the duration of the loan resulting in lower renewal fees to the bank by 1/3. It shows the bank has increased confidence in the finance of MFIN.
2. The insiders keep on adding shares even though they already have a lot.
3. The cash flow in the last year was $91.6 M.
4. MFIN paid $44 M in tax last year.
5. MFIN paid off $80.5 M of its debt last year.
6. The bond price of a company often reflects its financial health. MFINL is close to its face value.
7. There are reasons to believe the high earnings reported are real.
Is MFIN overvalued at current levels? Yo you should really check out awesom*stocks, they seem on point with their stocks.
The extension was not the news the shorts wanted to hear :)
Seven months ago "Medallion Financial Corp. (MFIN) announced today that, through a special purpose subsidiary, it has renewed for an additional six months its $125 million credit facility agreement with DZ Bank AG Deutsch"
It is announced today that the credit facility, secure with medallion loans, is renewed for an additional eight months.