Marblegate's Milgram Explains Taxi Medallion Investment 🚖

Marblegate Managing Partner Andrew Milgram's initial reaction to investing in NYC taxi medallions was "That's the worst idea I've ever heard". What changed?

Jul 06, 2023

As Marblegate prepares to list its NYC taxi medallion-related assets, we thought it might be helpful for our readers to understand their investment thesis. Simply put, why did Marblegate invest so much money into the NYC taxi medallion market?

Who better to explain their thesis than Andrew Milgram, Managing Partner and Chief Investment Officer of Marblegate!

In a July 2022 interview published by Capital Allocators with Ted Seides, Milgram is asked to explain the origin story and thinking around investing in the distressed NYC taxi medallion market (Note: taxi medallion specific commentary starts at 33:38 and lasts about 10 minutes).

Notable Quotes

“My partner Paul, who does a lot of sourcing for us, came back from talking to a New York bank and he said…hey I just got back from talking to this bank and they’ve got a portfolio of loans against New York City taxi medallions and they want to know if we want to take a look…I looked at him and said that’s the worst idea I’ve ever heard”(33:46)
“So, you’re telling me there’s no price you would pay”(34:38)
“[Initially] we really understood the only thing we knew about taxi medallions in New York City is what we knew from riding in the back seat… [later on concluded] that there was huge universe and ecosystem that surrounded the medallion system that was at once super scary, highly regulated, but offered a huge opportunity” (34:55)
“Yellow taxis are a piece of New York City’s infrastructure and the City thinks about it that way” (36:24)
“[There’s an] impact of Yellows on the City’s budget, so they are meaningful line item on the City’s budget every year, and a line item we felt confident New York City recognized and would ultimately want to protect”(36:53)
“The profitability of a yellow taxi driver was superior to that of an Uber driver” (37:25)
“One of the pieces of our diligence process is I became a licensed taxi driver and went out and drove cabs, which I still do”(37:50)
“The NCUA [oversees the credit unions] was super sensitive to the treatment of the underlying borrower, which we were as well” (39:21)

How Many NYC Taxi Medallions & Loans Does Marblegate Own?

“Our first purchase was of outright medallions…there was foreclosure notice for 46 medallions being auctioned on behalf of Citibank…[we] ended up buying 46 medallions in an open outcry auction at the airport Marriott at LaGuardia…for certain I was the only investment manager there”(35:27)
“The first large portfolio we bought was 1,000 medallions or so and that formed the real core of portfolio we ultimately built. We followed with several smaller portfolio purchases and then the sort of big signature portfolio that we bought was NCUA, which [oversees the credit unions]”(38:42)

We found a corresponding press release that matches Milgram’s statements above (see below press release from NCUA). Our best GUESS is Marblegate owns (or controls) between 3,000 to 6,000🤷 NYC taxi medallions or medallion-backed loans (i.e., low to mid-thousands). We’ll hopefully get more specific details ahead of a listing, so we don’t have such a wide ranging guess.

Given there are only 13,587 issued NYC taxi medallions, Marblegate’s holding could represent a significant portion of ENTIRE NYC taxi medallion industry. Publicly listing their holdings, would essentially create a liquid, publicly traded valuation benchmark for the NYC taxi medallion industry. This should help price discovery & liquidity for NYC taxi medallions.

Source: National Credit Union Administration (NCUA)

Note, publicly-listed Medallion Financial ($MFIN ) revealed 455 NYC taxi medallion loans in foreclosure, which also makes them a sizeable, but smaller player than Marblegate now.

Another institutional investor that’s built up holdings in the NYC taxi medallion market is O'Brien Staley Partners (OSP), a Minnesota-based investment firm.

The NCUA (National Credit Union Administration) also has a fairly detailed timeline about the NYC taxi medallion crisis, which we thought was worth flagging.

As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.

AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️

Marblegate's Milgram Explains Taxi Medallion Investment 🚖

Marblegate Managing Partner Andrew Milgram's initial reaction to investing in NYC taxi medallions was "That's the worst idea I've ever heard". What changed?

Who better to explain their thesis than Andrew Milgram, Managing Partner and Chief Investment Officer of Marblegate!

Notable Quotes

“So, you’re telling me there’s no price you would pay”(34:38)

“Yellow taxis are a piece of New York City’s infrastructure and the City thinks about it that way” (36:24)

“[There’s an] impact of Yellows on the City’s budget, so they are meaningful line item on the City’s budget every year, and a line item we felt confident New York City recognized and would ultimately want to protect”(36:53)

“The profitability of a yellow taxi driver was superior to that of an Uber driver” (37:25)

“One of the pieces of our diligence process is I became a licensed taxi driver and went out and drove cabs, which I still do”(37:50)

“The NCUA [oversees the credit unions] was super sensitive to the treatment of the underlying borrower, which we were as well” (39:21)

How Many NYC Taxi Medallions & Loans Does Marblegate Own?

“Our first purchase was of outright medallions…there was foreclosure notice for 46 medallions being auctioned on behalf of Citibank…[we] ended up buying 46 medallions in an open outcry auction at the airport Marriott at LaGuardia…for certain I was the only investment manager there”(35:27)

“The first large portfolio we bought was 1,000 medallions or so and that formed the real core of portfolio we ultimately built. We followed with several smaller portfolio purchases and then the sort of big signature portfolio that we bought was NCUA, which [oversees the credit unions]”(38:42)

Note, publicly-listed Medallion Financial ($MFIN ) revealed 455 NYC taxi medallion loans in foreclosure, which also makes them a sizeable, but smaller player than Marblegate now.

As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.

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