A mysterious hedge fund just scooped up the foreclosed medallions from New York City's 'Taxi King'
All 46 medallions - the metal plates on yellow cab hoods allowing them to legally pick up street-hails - were won by a group identified in bankruptcy court documents as MGPE Inc. for a total of $8.56 million, or $186,000 per medallion, according to Crain's New York. Business Insider was able to verify those numbers with an industry source as well.
The individual bidders behind MGPE Inc. are not identified in court filings but are part of a hedge fund and are expected to lease the medallions out to fleet operators, according to Crain's and verified with an industry source.
The New York City taxi medallion industry is new territory for hedge funds, who may be seeing the recent drop in medallion prices as a buying opportunity. Taxi medallions peaked in value in 2013 at more than $1 million but are now often auctioned off for less than half that amount.
Matthew Daus served as head of the Taxi & Limousine Commission for more than eight years and currently works for the law firm Windels Marx which has taxi industry clients. He says hedge funds are a rare sight in the taxi industry.
"When I was head of the TLC we targeted groups like hedge funds," says Daus. "We tried to get them involved, but they wouldn't touch medallions with a 10-foot pole back then."
In the week leading up to the auction, MGPE Inc. put in an opening "stalking-horse" bid for $7.7 million, or $167,500 per medallion. On the day of the auction, one group bid up the price, entering a bid of $175,000 per medallion for all 46 medallions before MGPE Inc. countered with the winning $186,000 per medallion bid.
There were also bidders willing to go higher than $186,000, but only for individual medallions. The auctioneer chose to go with MGPE Inc.'s bulk offer, according to Crain's and verified by an industry source.
The $186,000 medallion price is not expected to become the new normal for future medallion auctions, according to Daus.
"These medallions were foreclosed upon as a part of Freidman's bankruptcy," says Daus. "These bulk bargain bids are not indicative of a medallion's true market value."