I wrote about Jordan Wathen recently, a kid fresh out of college who fancies himself a Business Development Company expert. Somehow the Motley Fool, which is becoming ever more true to its name, and Investopedia have given him a forum. He’s chosen to wade into waters he has no understanding of or, as the new SPECTRE trailer quote says, “He’s a kite flapping in a hurricane”.
Despite claiming that he has no position in a particular stock, he sure spends an awful lot of time writing about one in the taxi medallion financial industry. His latest piece of nonsense — Investopedia really needs some editorial oversight — questions if this taxi medallion financial player’s dividend is safe. That’s a legit question to ask of any company, and it’s always a good to run the numbers.
Or rather, a good idea to run ALL the numbers.
Jordan Wathen is so fixated on the disproven theory that taxi medallion financial industry cash flows are in trouble, that he spends his entire article talking about “net investment income” in regards to the dividend, and completely ignores what really matters for a LENDING COMPANY! It’s called “interest income”.
Jordan Wathen says, “Now we just need a good measure of its recurring income. Net investment income is the best fit, in my opinion.”
Are you KIDDING? That’s not how it works. Not only does he miss the fact that Net Investment Income is not the recurring revenue he should be looking at, but what he does look at is ONLY taxi medallion financial income.
The company generates THREE TIMES MORE interest income from its other operations!
Now, I’ll leave it to you to figure this out: is Jordan Wathen just ignorant, or is he deliberately misleading readers and investors? He’s young, so I’m going with the former for the moment. When you’re still a kid, you tend to think you’re much smarter than you are.
Meanwhile, Jordan Wathen continues to dodge the Ten Important Questions posed to him both here and on Twitter. How can he make claims about any company in the taxi medallion financial industry without answering these for himself and for readers.
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?
I’m not holding my breath for his answers.