Allow me to share an investment insight I recently received from self-made millionaire, Chris Camillo.
Chris is the bestselling author who turned $20,000 into $4 million straight through the Financial Crisis, without shorting the collapsing housing market.
Back in November, Chris invited me into his home to sit and chat.
Knowing that all legendary investors have their own “secret sauce,” I listened very carefully.
And today, I’m stealing Chris’ secret to reveal my favorite company among MIT’s just-published list of the “Top 50 Smartest Companies.”
The company is Uber, MIT’s 26th Smartest Company…
Uber is a sedan service that’s ready to push the taxicab industry into extinction.
Forget dirty, smelly cabs… with the Uber app loaded on your smartphone, the click of a button will summon a beautiful black towncar ready to take you anywhere.
The towncar usually arrives in less than seven minutes, too.
Oh, and the driver is courteous and attentive. Imagine that!
When I downloaded the Uber app, I was prompted to load a credit card, which ingeniously eliminates a cash exchange.
And upon arriving at my destination, I simply opened the door and exited the vehicle.
The driver’s gratuity is built into the price, as well!
I never even reached for my wallet. (Check out this video of me in an Uber “black car” this morning.)
But here’s why I’m declaring the taxicab industry dead…
With all the subtle nuances of a personal limousine service, Uber’s prices are right in line with taxis. Sometimes they’re even cheaper!
Personally, I hope to never see the inside of a cab again.
Now, how does my conversation with bestselling author, Chris Camillo, factor in?
It’s simple, really.
Chris made his fortune exploiting what he calls “information imbalances.”
While that may sound complicated, it’s not.
An information imbalance occurs when the public has a rare, unfair advantage over Wall Street.
The advantage comes from having the freedom to invest alongside trends, phenoms and sensations just as they’re happening.
Wall Street is its own worst enemy in this regard.
Institutional controls and regulations weigh on money managers like cement, which means they’re sitting ducks for any “unexpected” profit sensations.
For example, Wall Street totally missed Uggs, True Religion Jeans and Crocs as they swept the nation.
Wall Street also missed the Wendy’s “Pretzel Burger” craze.
And guess what?
Wall Street is about to miss the next BIG one!
How to play the rise of personal sedan services…
Undoubtedly, competitors will arrive to challenge Uber. I mean, competition is the nature of free markets, right?
But the competition won’t come from taxicabs.
Quite frankly, taxicab companies have failed miserably to adapt to a changing market. And now it’s way too late for them to save themselves.
The fly in the ointment here is that Uber is a privately held company.
Boy, it’d be a shame to waste a classic information imbalance, though.
So I’m going to break form and recommend “going short” shares of Medallion Financial Corp. (TAXI.O).
Medallion Financial controls the financing of taxicab medallions.
These medallions are the licenses required to operate taxicabs in major cities like New York, Boston, Chicago, Newark, Philadelphia and Baltimore.
As Uber continues to rise to power, taxicab medallions will be worth less and less.
Only 4.8% of the shares are presently being held “short,” so we’re nice and early on this one.
For our more aggressive speculators, consider buying a few November 2014 $10 put options.
By November, I expect cabbies will be scrambling to survive, meaning those put options will have exploded in value.