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A Sober Look at SPACs (2020)

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Re: A Sober Look at SPACs (2020)

#91

Post by pcthrowaway »

an_opabinia wrote: post #85
HNfriend234 wrote: post #52

I invest in SPACs regularly and have made a killing off investing in them. Plain and simple, SPACs are all about hype in terms of how much hype the target company can garner. I only buy pre-LOI SPACs and then consider selling them on the merger announcement or right before the merger completes. This strategy works because of social media. People go around social media to hype up the company so to a certain extent it…

The reason SPACs work has nothing to do with hype. People hype shit on the Internet all the time. There's no insight here. One reason SPACs work is that Apple, Google, Amazon, Facebook, Berkshire Hathaway and (to a lesser extent) Microsoft are sitting on huge cash piles and not doing acquisitions. For almost a decade. So of course high quality mid-caps are going to be "cheap." So while I appreciate your appeal to stu…

Legitimately confused by this claim. These companies all do tons of acquisitions

Re: A Sober Look at SPACs (2020)

#92

Post by nopzor »

DebtDeflation wrote: post #24
goat_whisperer wrote: post #14

I didn't know a great deal about SPACs, but it looks like the real winners are the initial Sponsors and IPO investors, while the losers are the suckers who pay shares after the SPAC merges with the target company. Let's examine how convoluted the SPAC process is. First, a SPAC raises money through an IPO that it will use to merge with a target company. Then, when the SPAC finds a target and proposes a merger, many of…

>As a rule of thumb, the more convoluted things get in finance, the more nefarious the intentions Many years ago, the quote I heard went something like, "There are only 3 real asset classes: Equities, Fixed Income, and instruments designed to make money for Wall Street. Colloquially known as Stocks, Bonds, and Bullshit."

what’s the difference between equities and stocks?

Re: A Sober Look at SPACs (2020)

#93

Post by rantwasp »

hntrader wrote: post #88
Judgmentality wrote: post #87

Earlier quoted context omitted.

> If we're going to go through the rigmarole of passing new regulations in order to solve some problem, the problem should be of sufficient magnitude to justify the associated costs Agreed. > Evidence or reason hasn't been provided that this is even a problem Strongly disagree. I realize there's lots of noise right now, but the signal is starting to shake out in the news. > let alone a problem of any meaningful magni…

Putting analogies aside, what I'm saying is that regulating this would be extremely costly to industry and for extremely little (or no) benefit. Stocks with a short interest over 100% almost never happen, and in the rare case that it does, nobody has provided a sound rationale about why this is a bad thing and not even a good thing. If you think you have a rationale as to why it's a bad thing, please present it. I te…

i like your optimism, but here is the thing: shorting is not valuable to society. if a company sucks their stock will go down. if it’s a good company their stock will go up.

shorting just puts artificial pressure on the price. it’s a practice that i believe has no place in the market.

the same way that HF trading is just a big scam dressed up nicely. we need things that bring value, not scams

Re: A Sober Look at SPACs (2020)

#94

Post by rantwasp »

kelnos wrote: post #90
Judgmentality wrote: post #82

Earlier quoted context omitted.

> In practice it doesn't make a big difference whether it's banned or not. Stocks almost never have a short-interest above 100% Except it just happened? This is like arguing for not fixing a really weird state in code. "It's not supposed to be able to get into that state so we just ignore it."

> Except it just happened? So what? If there's that much interest in shorting a stock, and it can be done, why not allow it?

fair enough. but if people want to buy the stock at 350$ why disallow it? we either run with the rules or not. you don’t change the rules when the game no longer worked as you want it to work

Re: A Sober Look at SPACs (2020)

#95

Post by BaconJuice »

woah wrote: post #10
cj wrote: post #3

Just one example of why SPACs need to be looked at from a regulatory perspective: https://www.cnbc.com/2021/02/05/chamath-palihapitiya-backed-... In short, Clover Health is going public via a SPAC, but never disclosed it was under investigation by the DOJ. > Clover said it decided it did not need to disclose the DOJ inquiries after consultation with its lawyers. The company did not say what the DOJ’s inquiries were a…

Chamath first came to my attention last week when he introduced his run for California governor by promising to give everyone free money and cut taxes to zero. He then bought into GameStop stock, pumped it, and sold at the top while many gullible fools lost their life savings. What a shady dude.

what does gullible fools dumping money on GME options have to do with Chamath?

Re: A Sober Look at SPACs (2020)

#96

Post by [deleted] »

rantwasp wrote: post #93
hntrader wrote: post #88

Earlier quoted context omitted.

Putting analogies aside, what I'm saying is that regulating this would be extremely costly to industry and for extremely little (or no) benefit. Stocks with a short interest over 100% almost never happen, and in the rare case that it does, nobody has provided a sound rationale about why this is a bad thing and not even a good thing. If you think you have a rationale as to why it's a bad thing, please present it. I te…

i like your optimism, but here is the thing: shorting is not valuable to society. if a company sucks their stock will go down. if it’s a good company their stock will go up. shorting just puts artificial pressure on the price. it’s a practice that i believe has no place in the market. the same way that HF trading is just a big scam dressed up nicely. we need things that bring value, not scams

[deleted]

Re: A Sober Look at SPACs (2020)

#97

Post by HNfriend234 »

an_opabinia wrote: post #85
HNfriend234 wrote: post #52

I invest in SPACs regularly and have made a killing off investing in them. Plain and simple, SPACs are all about hype in terms of how much hype the target company can garner. I only buy pre-LOI SPACs and then consider selling them on the merger announcement or right before the merger completes. This strategy works because of social media. People go around social media to hype up the company so to a certain extent it…

The reason SPACs work has nothing to do with hype. People hype shit on the Internet all the time. There's no insight here. One reason SPACs work is that Apple, Google, Amazon, Facebook, Berkshire Hathaway and (to a lesser extent) Microsoft are sitting on huge cash piles and not doing acquisitions. For almost a decade. So of course high quality mid-caps are going to be "cheap." So while I appreciate your appeal to stu…

That's from a business perspective. I'm talking about from an investing/speculating aspect of them. One of the reasons why SPACs have become so popular among retail investors is because of hype on social media around them.

Re: A Sober Look at SPACs (2020)

#98

Post by HNfriend234 »

dontreact wrote: post #56
HNfriend234 wrote: post #52

I invest in SPACs regularly and have made a killing off investing in them. Plain and simple, SPACs are all about hype in terms of how much hype the target company can garner. I only buy pre-LOI SPACs and then consider selling them on the merger announcement or right before the merger completes. This strategy works because of social media. People go around social media to hype up the company so to a certain extent it…

Dumb question: how do you decide which SPACs to buy if it's before the LOI and you can't figure out what company they will be hyping?

You look at the management team and see if they have potential. For example, a SPAC with a "google executive" would be more desirable over some no-name person. Same for the type of companies they're targeting. An industry like electric vehicle would be superior over a spac targeting ed tech for example.

Re: A Sober Look at SPACs (2020)

#99

Post by totalZero »

vtantia wrote: post #31

Whenever you have some instrument attacking Wall Street (in this case, the IPO itself), papers come out trying to protect them. This does not mention drawbacks of the IPO the SPAC is getting rid of - the 6-7% investment banking fee, the hassle of doing several roadshows, the near 100% IPO pop due to which the company raises half of what it would have (amounting to a 50% fee so to say which goes into the pockets of in…

An IPO pop is considered favorable versus the converse. You don't sell the whole company, so you still make money on the non-offered shares and you get an optically desirable price bump that can contribute to further positivity about the stock.

Affirm priced around $12B (but now trades over $25B), yet they only raised about 10% of that. So yeah they left some money on the table but who's to say the stock would have generated such a pop if the IPO had priced higher?

There's a lot of virtue in being long-term greedy, and sometimes that means leaving money on the table.

Re: A Sober Look at SPACs (2020)

#100

Post by Judgmentality »

rantwasp wrote: post #93
hntrader wrote: post #88

Earlier quoted context omitted.

Putting analogies aside, what I'm saying is that regulating this would be extremely costly to industry and for extremely little (or no) benefit. Stocks with a short interest over 100% almost never happen, and in the rare case that it does, nobody has provided a sound rationale about why this is a bad thing and not even a good thing. If you think you have a rationale as to why it's a bad thing, please present it. I te…

i like your optimism, but here is the thing: shorting is not valuable to society. if a company sucks their stock will go down. if it’s a good company their stock will go up. shorting just puts artificial pressure on the price. it’s a practice that i believe has no place in the market. the same way that HF trading is just a big scam dressed up nicely. we need things that bring value, not scams

> shorting is not valuable to society.

Why is shorting any less valuable than investing in a stock? You can speculate it will go up or down. Both are bets, both have incentives to manipulate the stock price, and without both you remove a downward pressure that stops stocks from skyrocketing like in 1929 (where a short is what crashed everything).

https://www.cbsnews.com/news/short-selling-evil-or-necessary...

I think the stock market would be much less healthy without shorting than with it.

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