Medallion Financial (TAXI +0.3%) - a financier originating and servicing loans (mostly in NYC) to purchase city-issued "medallions" required to operate yellow cabs - has lost about one-third of its value since November as short-sellers have rushed in. The decline in the stock also comes alongside booming interest in Uber.
The percentage of Medallion shares on loan hit an all-time high of 5% of the float last week, according to Markit.
“The medallion’s monopoly on gaining entry to the New York taxi market looks set to weaken in the coming years as companies such as Uber and Lyft start to provide digital competition to their old-school peers for their share of the taxi world," says Markit analyst Simon Colvin. He notes NYC prices remain near their all-time highs (over $1M vs. $600K in 2008, $195K in 2001, and $10 in 1937), but prices are falling in Chicago and lower revenues from medallion leasing have hit San Francisco.
The selloff in BDCs is a buying opportunity, writes BDC reporter, noting the opportunity today to invest in a basket of BDCs (using BDCS as a proxy) at an 11% higher yield than just three months ago. The sector is yielding 43% more than high yield bonds (HYG) and nearly double floating rate loans (BKLN).
The higher yield, of course, reflects market concern distributions are set to fall (and BKCC and MCGC cut in Q1), but for the sector as a whole, distributions have been fairly stable over the last three years. Further, a number of players are under-leveraged or in growth phase, and occasionally have realized gains which are paid out as special distributions.
WIth business development companies getting the boot from S&P indices, will the Russell follow suit? It's a significant issue as investors are far more heavily invested in BDCs though the Russell indices than through S&P, writes Brendan Conway. He notes ownership of BDCs by Russell-tracking index funds are as high as 38 days worth of trading volume, and Wells Fargo estimates there are 24 BDCs where 10 or more days of average volume would be required to unload them.
Wells, however, does not see Russell following S&P's lead, with item #1 being Russell's desire to "represent small cap reality." "Russell Indices receive acclaim because they are willing to provide investors access to the true investable small cap universe. To the extent BDCs are excluded, this would deprive investors the opportunity to invest in what has become a very large/growing industry."
The following list is those BDCs with 10 or more days of average volume in index funds tracking Russell indices.
It was raining hard in 'Frisco ... TAXI is off 8.5% premarket to $16.10 after pricing a 2.9M share secondary at $16.40. The underwriter greenshoe is for an additional 435K shares. The offering will add about 15% to the float.
Medallion Financial (TAXI +5.1%), provider of financing for taxicab medallions in some major U.S. cities, speeds to a three-year high on a NYT report that NYC taxi medallion prices hit a record $1M, up from $10 when first issued in 1937. Not a bad investment: The value of a medallion is up 1,900% since 1981.