Tag Archives: TAXI

Niche Franchise Breached? Value Trap


Taxi Medallions have been one of the best performing assets over the past twenty years: http://www.dailyfinance.com/2011/11/16/the-best-investment-on-wall-street-a-new-york-city-taxi-medalli/

However, you as an investor, must require a very high discount rate when you depend upon government licenses.  If Uber makes inroads?http://www.bizjournals.com/sanfrancisco/print-edition/2013/05/17/uber-takes-the-pain-out-of-hailing-a.html?page=2


taxi ten


“Value” investors may flock to the seductive yield:  http://seekingalpha.com/article/2246123-medallion-financial-hail-this-high-yield

But csinvesting.org readers know their history when technological change or a catalyst for regulatory change Airline_deregulation upends an incumbent, then the plunging price becomes a value trap versus an opportunity.  Reflexively reaching for this 8% yield by not turn out well.

Of course, the future is uncertain, but after a five year bull run, failure to advance after last quarter’s earnings beat and pricing pressure from UBER, then TAXI’s high valued medallions may become less so.  The government is placing an artificial restriction to keep supply low while boosting prices that hurt consumers’ choices and pocketbook. I wonder how this fight will turn-out?  I will be watching this unfold.

What do YOU think?