NYC Taxi Medallions: A Contrarian Bet

Hedge funds and private equity groups alike are looking at taxi medallions as ride-sharing technology has caused values to plummet. Per an article in the WSJ, the number of vehicles dedicated to ride-hailing apps has tripled since 2015 to 80,000, which dwarfs the 13,500 yellow taxis servicing the city.

“Marblegate, which began buying up medallions last fall at prices between $175,000 and $200,000, isn’t trying to call a bottom, according to people familiar with its strategy. Instead, it plans to operate its own fleet of taxi cabs and believes it can run a better business than existing operators—in part by improving working conditions and benefits for its drivers.”

The article also provided some high-level math to explain the investment. At a price of $175,000, and assuming that a medallion owner can lease their property to a fleet operator for $15,000 a year, a buyer can expect an 8% to 9% return on their investment. The article cites this as a base case and suggests Marblegate could do substantially better by operating their own fleet. Click on the link below for more.

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Source: Paul Berger | "Hedge Fund Bets on Beaten-Up New York Taxi Business" | The Wall Street Journal | 10/13/2018 | Visit