Copy-Cat Claims
When told of the association’s concern, Abrams said he plans to set up five companies with 200 licenses each.
Abrams’ plans are even more ambitious when set against the country’s economic backdrop and its battle with holders of bonds on which the government defaulted in 2001.
Gross domestic product unexpectedly contracted 0.2 percent in the first quarter, while consumer prices rose 15 percent in the first six months of the year, government data show. Argentina devalued the peso by 19 percent in January.
On June 16, the U.S. Supreme Court rejected an appeal of a lower court ruling ordering the country to pay $1.5 billion to holdout creditors that Fernandez calls vultures at the same time it pays debt restructured after the default. The government is refusing to comply with the ruling, saying copy-cat claims would deplete its $29.7 billion of reserves, raising the specter of a new default. Without a deal or delay in its conflict with creditors, the nation will default on July 30.
‘Bottom Out’
“Argentina is already in an economic crisis and I believe it will bottom over the next six months,” Abrams said. “I am accelerating our license acquisitions, as people in Buenos Aires are very nervous.”
Abrams says he made a 10 percent return this year through June, or 21 percent on an annualized basis, on income from fares.
The year-to-date figure beats the 6 percent he says he’s earned at SEP Consulting, the wealth-management office in New York where he works as a fund manager. It also surpasses this year’s 7 percent gain in the Standard & Poor’s 500 stock index.
The returns to be had in Argentina can’t be replicated at home, Abrams says. While New York taxi medallions have about doubled over the past six years to $1.05 million, according to the city’s Taxi & Limousine Commission, he bets future increases won’t exceed Argentina’s.