|Shares Out. (in M):||22||P/E||10.6x||9.5x|
|Market Cap (in $M):||229||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||0||EBIT||0||0|
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Medallion Financial Corporation (NASDAQ: TAXI)
June 5, 2012 - Long
52 Week: $8.50-12.59
Diluted Market Cap: $229mm
Dividend Yield: 8.0%
Price / Book: 110%
Price / TBV: 112%
Price / 2012E: 10.6x (consensus)
Price / 2013E: 9.5x (consensus)
3 Month ADV: 118k
Short Interest % of Float: 2.1%
Days to Cover: 4.6
Interest rates are at historic lows and we currently live in a “yield starved” environment. Medallion Financial Corporation (NASDAQ: TAXI) is a stock that offers investors the opportunity to clip an 8% dividend in perpetuity that will grow over time. In addition, the stock has several catalysts (increased medallion loan demand, conversion of bank to receive LLC tax treatment, etc.) that can provide additional price appreciation.
Overview: Based in New York City, Medallion Financial is the only publicly traded specialty finance company in the US that focuses on originating and servicing loans that finance the purchase of taxicab medallions. In addition to originating taxicab medallion loans, the Company also originates commercial and consumer loans.
Medallion Financial operates as a business development company (“BDC”) at the holding company level but conducts a significant portion of its business through Medallion Bank, an industrial loan company (“ILC”) regulated by the FDIC and Utah Department of Financial Institutions. Medallion Financial is the only publicly traded BDC today that operates an FDIC-insured depository institution, which gives it the ability to retain capital and grow.
The original business, called “Medallion Funding Corporation,” was founded in 1979 by the Murstein family. The family took their business public in 1996, and the Company is led by father and son team Alvin (Chairman, CEO) and Andrew Murstein (President) today. The Murstein family owns ~14% of the Company. Several notable figures sit on the Company’s Board of Directors, including former New York Governor Mario Cuomo, former Senator and Governor of Connecticut Lowell P. Weicker, Jr., and Hall of Fame Baseball Player Hank Aaron.
Warning: Trading volume in TAXI shares is thin and there are only a small number of owners in this Company. As of 6/5/12, TAXI shares had a three month ADV of 118k. Prior to the recent $35mm offering (given to mostly retail), which was for ~16% of the Company, Medallion Financial had only ~245 shareholders.
STRONG CREDIT QUALITY
WELL POSITIONED TO GROW ASSET BASE
ADVANTAGEOUS FUNDING STRUCTURE THROUGH USE OF MEDALLION BANK
LIABILITY SENSITIVE BALANCE SHEET
New York City originally anticipated auctioning off 2,000 wheelchair accessible taxicab medallions in a series of auctions in 2012-2014. The TLC originally intended to sell the first 200 taxicab medallions in July 2012, the next 200 by the end of 2012, and the remaining 1,600 in four equal increments of 400, to be sold in February 2013, July 2013, February 2014 and July 2014.
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