Icarus
2 weeks ago

I have seen a bit of SPAC euphoria spreading around the world at the moment, Patrick Grove has announced the first Australian focused on aimed at 'the next Atlassian' (I rolled my eyes so hard it hurt) looking at companies valued north of $1bn. There has also been CCIV in the US which has quadrupled money for investors, and it hasn't even finalised a deal yet.I would be interested to know from those who have been around a while, is this the writing on the wall? I remeber reading about the dot com bubble from a variety of authors and they mention that there was an explosion in IPO's and the general consensus that nothing could go down in price, not only am I seeing a lot of IPO's but also SPAC's.

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elpaso96
2 weeks ago

In my US portfolio I did have CCIV but it is purely for trading. Made 3 bags and sold at 35, now it is 50 odd. SPACs are a type of "IPO Boom" fuelled by daytraders. All I did was look at the price of the SPAC, usually float at $10/share then look at the coming merger valuation. Put that valuation on a per share basis and if the discount is 40% or more I buy. Before buying I watch for the euphoria on Twitter using $CCIV and see whether influential SPAC twitter accounts are promoting the ticker. In the case of CCIV, that SPAC is rumored to be with Lucid Motors for $15B. The SPAC was trading ~$4B, I bought some waited for the market cap to hit $12B (which was my exit) and sold it off. Rinse and repeated for other SPACs and it worked out quite well. If the SPAC is not getting promoted through twitter or is not trading at a discount to proposed mergers, it's a pass. The SPAC companies will end very badly once QE stops. Currently, SPACs are there for trading not for investing. We might get a correction soon once covid cases go down and things start to slowly turn back to normal. When the economy is recovering with low unemployment figures, the central banks would halt QE and start raising rates to prevent overheating. Trading SPAC's was fun while it lasted. There is nothing fundamentally sound about any SPAC, it's just a game of musical chairs in the equity market promoted by Chamath. You could still play, but the music is slowing down. The writing is on the wall. This was what I did for like last 4 months in my US portfolio and what I now think about SPACs. This is not financial advice, otherwise I might be called in for a hearing :D

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Icarus
2 weeks ago

Thanks for the information elpaso, interesting take on it. They are termed as blank cheque companies but you are right in saying when they have declared their target (like Lucid Motors) they have an upper limit. I definitely think that they are speculative and if you are holding the bag when the music stops it is going to be hard to swallow. I will be interested to see whether there will be more sprouting up for the hot sectors, Lucid Motors and the EV sector is certainly driving the excitement up. I wouldn't be surprised to see some tech and ML/AI driven SPAC's come about while QE is a plenty.

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elpaso96
2 weeks ago

Lmao Lucid and CCIV did a full 180. Spacageddon is starting with retail investors getting screwed. Do heavy research before getting on the hype train and make sure you have a plan to get out. This guy Kevin is all over Youtube, and is pretty annoying seeing him on my newsfeed with clickbait titles. However, this was hilarious and shows the dangers of investing in SPACs. https://www.youtube.com/watch?v=NR76ObYeGkw

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Like reverse mergers, SPACs are just ways to avoid the scrutiny involved in preparing an S1. Avoid. 

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SeekingAlpha
5 months ago

I have been hearing and reading a lot on SPACs (seems all the rage these days) but it's pretty hard to find comprehensive litreature on how one goes about buying/selling a SPAC, risk vs return, holding period etc., so I thought of starting a topic, in the hope that people can share their knoweledge on the matter. 

Things I am interested in are: 

- SPAC units vs SPAC shares/warrants

- How can one split a SPAC unit into common shares and warrants 

- Best time to split the unit into shares/warrants 

- Once a SPAC identifies and merges with a target - do the SPAC units automatically convert into shares of the new entity and at what price?

  This is not an exhaustive list, so please feel free to add anything that comes to mind. 

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CounterInvest
5 months ago

Hi SeekingAlpha I have international trade access on nabtrade and can buy/sell. The one I was particularly interested in researching was VIHAU:NAS. VIHAU raised $200M as a blank cheque to purchase a company worth $800M to $2B. Found this article useful to understand a bit more: https://techcrunch.com/2020/08/21/almost-everything-you-need-to-know-about-spacs/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS5hdS8&guce_referrer_sig=AQAAACTb51g-CDzhnk_0_f9176A-g0Y2ucTzWgzx105OcMTvAns8mLbUeqL8WKR1H_7Sh7zTALC27JH9ErUeZConslroAlMAyAr_K1f56-XTBASAXEM2b3byV9ikUk7km08IG2VX6IJo96bzjJu09p6VSgQTR30vFyvElmIl1Ss8Fi4S They ask and answer similar questions and a little bit more.

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