Long Sticker, Short Prius
by Mr JugglesCalifornians appear willing to pay $4,000 more for used gasoline-electric hybrid vehicles that have state-issued carpool stickers than for hybrids that don’t.
We expect the markets for carpool-lane stickers to evolve, similar to the way the CDO market evolved for mortgages and other types of consumer debt. We see an opportunity for buying sticker-bearing hybrid cars, stripping off the stickers, and reselling both the sticker and the car separately. By selling the stickers to those who most want to avoid traffic — and the hybrid to those with the highest tree-hugging tendencies — one should be able to realize higher pricing versus the bundled buy that exists now.
The mortgage markets provide a clear path for success: hopefully, the collateralized sticker market will grow until it becomes completely out of control, encourages over-leveraged purchases of carpool lane stickers, and leading to a regulatory crackdown that starts an economic recession.
Recommendation: Short Prius cars, Long carpool lane stickers.
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It is rumored that Blackstone in working on an LBO of the California DMV. Debt to finance the purchase with be collateralized by current and future HOV Lane Stickers, as envisioned in the LoS article.
The first HOVLS CDO is said to be 3x oversubscribed, and a synthetic CDO is already in the works.
http://www.usatoday.com/money/autos/2007-03-25-hybrid-carpool-stickers_N.htm