There’s nothing more damaging than someone who doesn’t know what he doesn’t know, and being given a forum to propagate his ignorance.
Case in point: Jordan Wathen, a writer for the Motley Fool financial website. Wathen, a 25-year-old with exactly zero experience in real-world analysis for any financial firm, zero experience in specialty lending, and zero experience in public policy, somehow thinks he knows enough about taxi medallion lending to publish multiple articles on the subject.
Jordan Wathen has consistently misrepresented the taxi medallion lending industry with his curious assertions that have no logical or evidentiary backing, and doesn’t seem to understand the purpose of lawsuits when it comes to public policy.
He recently wrote about a lawsuit that four credit unions filed against the City of New York, alleging that their taxi medallion lending businesses are in trouble and the city hasn’t done enough to stop ridesharing services from operating illegally.
Jordan Wathen is too young, and lacks the public policy experience, to understand that lawsuits are filed all the time when issues like this arise. It is rarely about the actual survival of the aggrieved industry, but it IS always about MONEY. That’s the point of a lawsuit – convince a judge or a jury that may not have expertise in an area that the sky is falling and that relief is warranted. Anything that can push back the competition is a good thing. Lawsuits are but one tactic in a strategic arsenal.
Why does Jordan Wathen think the City of New York sued Airbnb? MONEY. The city wants its hotel room taxes. Guess why other lawsuits are being filed? Because the hotel lobby is working behind the scenes. It’s not because the hotel industry is in trouble, because it’s actually booming. It’s because it’s an unwelcome competitor that hotels think can be removed from competition.
Jordan Wathen lacks the experience to understand any of this. He’s exactly the kind of sucker that the credit unions would want on a jury, especially since he buys the claim that NYC medallions are trading for $675,000, which is not even close to being true.
His analysis is disturbingly flawed. His own article shows the average medallion loans at the credit unions range from $213,000 to $504,000. Yet he failed to research the false claim of $675,000 taxi medallion values, failed to research the true value of a NYC taxi medallion, failed to research the underwriting criteria and standards at the credit unions, failed to research the amount of collateral pledged over and above the taxi medallions themselves, failed to research the cash flows of taxi medallion borrowers at these credit unions, failed to research the actual state of taxi revenue declines, and failed to read Alexander Twerdahl’s research out of Sandler O’Neill that showed a total of $22 million of taxi medallion loans were at risk across the entire industry, if a free-flowing market of taxi medallion values fell to $675,000.
In fact, his most egregious comment was that because the credit unions must somehow be having problems, therefore the publicly traded lenders must be, also. I asked him via Twitter what evidence he had to support that point. You want to hear how he answered?
“Prove that they don’t”.
Really. Clearly the kid cut his high school logic class. When one makes an accusation, it is incumbent upon him to support the assertion, not respond like a grade-schooler.
Just to be sure, though, I wanted him to have a chance to answer. I asked for his Email address so I could interview him, and give him a chance to back up his claim. He refused. So I asked him questions via Twitter.
1) Did you factcheck the CU’s lawsuit claims?
2) Have you ever called mgmt of any lender?
3) If so, what did they say about cash flows?
4) Present your evidence of declining cash flows on borrowers.
5)You say you have to presume public companies are no different from CU’s. Why?
6) What evidence do you have of how they differ?
7)How does underwriting differ at public vs private lenders?
8) How much cash flow decline will trigger defaults at public co’s?
9) What’s your background in lending?
10) What is your definitive evidence that Uber is cause for any farebox declines?
Jordan Wathen refused to answer any of these questions, and we know why.
It isn’t just me that thinks this kid is out of his depth.
A US News and World Report article criticized Jordan Wathen’s approach to stock picking and his love of hedge funds. The article’s author says, “The first of the three “experts”, Jordan Wathen, does not get off to a good start. Wathen is a “big fan” of Seth Klarman, who he believes is “one of the world’s best hedge fund managers.” Why anyone would rely on the expertise of hedge fund managers, given their appalling returns, is a mystery”
An entry at The Magill Report rightly mocked a Jordan Wathen article at, you guessed it, The Motley Fool. Magill criticized Wathen’s poor analysis, which appears to be the kid’s hallmark. Under his headline, “Stupid Media Watch”, Magill shares the following:
Whenever the concept of death and email are expressed in the same sentence, it’s a good bet something stupid will follow. And sure enough, such was the case with a Jordan Wathen Motley Fool article published last week headlined: “Did Google Just Kill Email Marketing?” The article was supposed to provide some level-headed analysis of what effects Gmail’s recent automatic transition to a three-part inbox—divided into primary, social and promotional folders—might have on commercial email….Wathen also made a head-scratcher of a prediction on how Gmail’s change might affect small-business email service provider Constant Contact if the other inbox providers follow Gmail’s lead….As my 10-year-old son would say: “Wha Wha What?””
But let’s not just rely on others to tell us what we already know. Jordan Wathen is so out of his depth, that he believes the American shopping mall is going to die. In a March 2014 article at (again) the Fool, he claimed that malls are “in a secular and persistent decline”.
I guess he’s been out of touch with the retail mall REITs, which have soared almost five-fold in value since the financial crisis low, and are up over 20% since his “prophetic” article.
So when Jordan Wathen talks about the state of the taxi medallion industry, or any of its privately-held, or publicly traded lenders, understand that this is clearly a case of a Fool expounding on what he doesn’t know that he doesn’t know.
And proceed accordingly.