Trump Trade

The only trade Cable Car made in direct response to the US presidential election results was to cover the entire position in Cadiz (CDZI), discussed at length in a recent blog post.

While I believe Cable Car paid more to purchase CDZI than the equity will ultimately be worth even if the proposed water project is constructed, the decision to cover was an example of decision-making under uncertainty described earlier.

The most likely attitudes of the incoming Department of the Interior appointees and the increased importance of other policy priorities to the opposition substantially increase the likelihood of the project being built.


Short Position

Even in the absence of legislative change, political expectations will support the company’s ability to continue to raise capital. I expect to short it again someday.

By contrast, Cable Car did not adjust its short position in World Acceptance Corp (WRLD).

I believe early market predictions of the Consumer Financial Protection Bureau’s demise are greatly exaggerated, and a challenge to Director Cordray’s authority may be delayed pending a legal process.

Speed Up

Even if threatened by the incoming Congress, in my opinion, the bureau still has plenty of time to complete ongoing enforcement activities, which are the work of rank-and-file attorneys as opposed to political appointees.

Although doubt has been cast on future rulemaking, if anything, I expect increased political pressure on the agency to accelerate the timeline for the CFPB to bring cases or reach settlement agreements with companies it has already served with notices of potential legal action.

Photo Credit: Gage Skidmore via Flickr Creative Commons