Barron’s Doubles Down Their Uber Denial

Barron’s posts another risible puff piece on MFIN. Recall same author published a 1,000 word love letter to Andy Murstein in September 2015. The article was riddled with factual errors about TLC data showing an arrest in decline for yellow trips and farebox when market share losses were actually accelerating, promotional quotes from Wasatch while it was, in fact, SELLING the stock according to subsequent filings, and, of course, the now infamous quotation from Murstein that the chances of cutting the dividend were between “slim and none” – dividend subsequently cut 80% less than a year later. For a methodical dissection of that shoddy piece of journalism, see our article at the time

At the time, I had a constructive conversation with Jack who said he wished he had spoken to me before he published the article. Alas, he didn’t take his own advice, because he didn’t speak to me about this silly follow up, nor anyone else, other than Murstein, it would appear.

Barron’s and FT articles leave out key TAXI investment risks.Barron’s promoting beaten up, small cap stock with 16% yield predictably pops stock.Murstein commen
seekingalpha.com

 

Here’s the recent Barron’s article:

FOLLOW UP
Medallion Financial Investors: Best to Buckle Up

By Jack Willoughby
Barron’s
September 17, 2016
The financier of New York’s yellow cabs cut its dividend and felt the wrath of investors. Best to buckle up and brave the bumps.

Why didn’t we just hop out at the corner? Barron’s wrote positively about Medallion Financial a year ago, after shares of the specialty lender to New York’s yellow-cab owners had been run over by Uber Technologies, the popular ride-hailing service. We argued the 65% decline in Medallion was overdone because it still had a strong base of support and had diversified beyond lending to cabbies looking to buy medallions. The shares subsequently jumped 60%, to $9.90, by March of 2016.

Unfortunately, we got a little too comfy enjoying the sights from the back seat. The stock gradually drifted back toward the price at the time of our story (“Time to Hail Medallion Financial Shares,” Sept. 19, 2015) and then last month the family-run company slashed its quarterly dividend to five cents a share from 25 cents, cutting the stock’s yield to 5% from a hefty 20%. Adjusted second-quarter earnings came in at a six-cent loss, well below expectations. The shares, a long-time target for short sellers, have since lost 50%, to $4.

It’s way too late to get out of Medallion (ticker: MFIN). Company president Andrew Murstein says the sharp payout cut was needed to grow the company’s other operations, such as recreational vehicle loans. The stock is now very cheap, trading at just 5.3 times expected 2016 earnings of 75 cent a share. Delinquencies on the medallion loans have ticked up, but remain manageable, and Murstein says losses on them run at 0.47%. With its shares trading at just 40% of book value, Medallion could attract a private-equity buyer.

And yellow cabs haven’t disappeared. They provided 146 million rides to New Yorkers last year, down 11% from the previous year. Buckle up.

Here’s the previous article referred to:

Time to Hail Medallion Financial Shares Sept. 19, 2015

 

FEATURE

Time to Hail Medallion Financial Shares

The emergence of Uber has hurt this lender’s stock. But the threat to the overall business is overhyped.

September 19, 2015

Shares of New York City’s Medallion Financial have been run over by deep-pocketed start-up Uber Technologies, now Gotham’s largest taxi operator.

The firm is a leading lender to individuals and companies seeking to own and operate yellow cabs through the purchase of a medallion, which is bestowed by the New York City Taxi and Limousine Commission and allows drivers to pick up passengers who hail them on the street. In all, there are only about 13,000 medallions available, which has at times made them a very secure…

 

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