- Pre-deal SPACs trading near IPO prices offer a unique opportunity to invest with limited downside, but unlimited upside.
- I apply 3 main criteria for finding SPACs with big upside potential.
- Use this list to buy a wide spread of SPACs or use the SPAC & New Issue ETF to play the pre-deal SPAC market.
We have talked about SPACS on a few different occasions. Here is our coverage of SPACs this year, including the foundation piece:
A number of SPACs have announced deals. Most of these, I have chosen to own the stocks going forward on the idea that they are good mergers. Here’s the list so far:
- MP Materials (MP) – long-term winner in Rare Earth production and processing moving to America from China. I plan to own this one a long time.
- Fast Acquisition Corp (FST) (FSTU) – Golden Nugget Online gambling, Golden Nugget, Landrys and a lot of other restaurants. Well funded to fill the gaps where entertainment and restaurants went out of business. I plan to own this one well into the next economic upcycle.
- SpaceMobile (NPA) – low earth orbit satellites for global 5G connectivity. Already signed deals with AT&T (T) and Vodafone (VOD). I plan to own this one a long time.
- WeWork (BOWXU) – Bowx Acquisition is bringing WeWork to market 75% below where it was a year ago. It worth somewhere between that high and this low. I plan to own this one well into the next economic upcycle.
- Ajax I (AJAX) – has agreed to bring Cazoo Holdings, an online car retailer,, public with a 10% stake. I’m undecided on this one.
New SPACs I’m Adding
I am adding these SPACs to accounts that own a basket of 6-10 SPACs. Note I looked specifically for companies with no warrants or small warrant ratios.
- ArcLight Clean Transition Corp (ACTD) – The BOD is ultra connected, including Dr. Ja-Chin Audrey Lee has been an executive at SunRun and serves as Co-Chair of Clean Energy for Biden. [1/5 warrant]
- Kohsla Ventures III (KVSC) – Vinod Khosla (Sun Microsystems) and Sara Clemens (Twitch, Pandora). [no warrant]
New SPACs For Big Baskets
I am adding these SPACs to accounts that are holding more than ten SPACs.
- Gores Guggenheim (GGPI) – Directors include Nancy Tellem (Director of Metro-Goldwyn-Mayer and Former President of the CBS Network Television Entertainment Group). [1/5 warrant]
- MSD Acquisition (MSDA) – Michael Dell’s group. [1/5 warrant]
- Altimeter Growth (AGC) – Brad Gerstner, in talks to bring Grab, a ride hailing service in Asia (UBER) (LYFT), public. [1/5 warrant]
SPAC Pricing, Capital & Likely Target
These SPACs are still looking for deals.
|SPAC||Common $||Trust $||Broad Target|
|Fortress Capital Acq (FCAXU)||9.82||400m||fintech|
|Cohn Robbins Holdings (CRHCU)||9.88||828m||fintech|
|Apollo Strategic Growth Cap (APSGU)||9.93||816m||tech|
|Ares Acquisition (AAC.U)||9.83||1b||EVs|
|ArcLight (ACTD)||9.98 [unit]||311m||alt energy|
|Kohsla Ventures III (KVSC)||9.97||500m||tech / alt energy|
|Liberty Media Acq (LMACU)||10.12||575m||entertainment / media|
|Spartan Acq III (SPAQU)||10.00 [unit]||552m||alt energy|
|Soaring Eagle (SRNGU)||10.04 [unit]||1.725b||alt energy|
|Gores Guggenheim (GGPI)||9.92 [unit]||750m||consumer / entertainment|
|MSD Acq (MSDA)||10.05 [unit]||575m||tech / media|
SPAC & New Issue ETF (SPCX)
This ETF offers exposure to several dozen SPACs using a simple method of buying pre-deal SPACs near the IPO price, then selling the pops on deal announcements, or redeeming shares while keeping warrants.
If you don’t want to manage the SPAC basket yourself, and it does require management of the units and splitting them up to stock and warrants, then use this ETF. It’s diversified and well managed. Also, right now, with so many SPACs trading at about trust value, i.e. near IPO price, it’s a bargain.
Disclosure: I am/we are long MP, BOWX, NPA, FCAX, CRHC, APSG, AAC.U, SPAQU, LMACU, FST.