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SPACs collapse as $11B of deals are called off within an hour

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Re: SPACs collapse as $11B of deals are called off within an hour

#71

Post by drexlspivey »

skybrian wrote: post #27

Due to how SPACs work, investors will be getting most of their money back. Typically they IPO at $10. The money gets returned if no deal is made. > Concord’s sponsors will throw in the towel and return roughly $10.17 a share to investors, the SPAC said in a subsequent filing. The stock closed at a high of $13 in November 2021 and garnered attention from Wood’s Ark Investment, which is among the SPAC’s biggest investo…

A lot of people park their cash in SPACs at NAV and pull them when a deal is announced (but before the merger). You get the treasury rate (minus expenses) with a chance of a pop if an exciting deal is announced. It really is a +EV situation and if you did that last year you made a ~1.5% ROI as opposed to the -15% of the S&P

Re: SPACs collapse as $11B of deals are called off within an hour

#72

Post by formercoder »

stygiansonic wrote: post #32
skybrian wrote: post #27

Due to how SPACs work, investors will be getting most of their money back. Typically they IPO at $10. The money gets returned if no deal is made. > Concord’s sponsors will throw in the towel and return roughly $10.17 a share to investors, the SPAC said in a subsequent filing. The stock closed at a high of $13 in November 2021 and garnered attention from Wood’s Ark Investment, which is among the SPAC’s biggest investo…

Do they all IPO at $10 price and if so why?

Always $10, the share price is a complete fabrication so this just became a trend because it’s a nice number that’s easy to calculate %s from and the S-1 math was more standardized.

Re: SPACs collapse as $11B of deals are called off within an hour

#73

Post by fshbbdssbbgdd »

joshu wrote: post #61
conorcleary wrote: post #57

Earlier quoted context omitted.

Quoted post unavailable.

Huh?

Not the parent, I can’t speak for them.

But sometimes I have a paranoid notion that the managerial and legal class have constructed systems where they contain some liability into a black box, then hire someone unknowing to live in the box. The people outside the box are just designing the process and “relying” on the box to behave as expected. The people inside the box don’t know about the context and therefore don’t have mens rea. Nobody is guilty of a crime.

The story in this thread tickles that paranoia. I can imagine a person on one side who has implemented a compliance checking system, where as long as nothing gets flagged by the black box, the system reads “compliant”. It turns out the person in the black box is deleting the non compliant records. But they don’t realize that they are allowing someone to falsely fulfill their compliance certification, they are just making the box work.

Re: SPACs collapse as $11B of deals are called off within an hour

#74

Post by formercoder »

azinman2 wrote: post #43
this_user wrote: post #41

Earlier quoted context omitted.

Not really. You just have to ask yourself why these private companies were even going the SPAC route rather than do a regular IPO. The answer was usually that these were not particularly great companies, and doing an IPO means the company is put under a lot of scrutiny. SPACs are a way to avoid that, so insiders can cash out.

Or they were high capital low margin businesses. There are many of these out there, like defense or airline businesses. We need them to exist, but investors don’t like them because it’s harder to make money from them. It doesn’t mean the business is bad, it just means payoff is longer. SPACs are one of the few ways they can get money.

The vast majority of businesses are high capital and low margin by HN standards. Plenty of them IPO just fine.

Re: SPACs collapse as $11B of deals are called off within an hour

#75

Post by drexlspivey »

pbreit wrote: post #62
stygiansonic wrote: post #32

Earlier quoted context omitted.

Do they all IPO at $10 price and if so why?

They will structure the deal such that the value of those shares is targeted to be about $10. Seems like they don't always achiever that. One of Chamath's DNA SPACs only started trading recently and is way down: https://www.google.com/search?q=NASDAQ%3A+AKLI

Before the merger goes through the stock price has a floor of $10. Typically the SPAC will IPO and start looking for a deal, this takes around 1-1.5 year. During that time the stock will be trading at around $10. When a deal is announced it typically takes 3-6 months for the merger to complete. The floor is still in place during that time. After the merger goes through the floor disappears and it starts trading like a normal stock.

Re: SPACs collapse as $11B of deals are called off within an hour

#76

Post by feifan »

boringg wrote: post #4

Any successful SPACs out there?

It depends on your time horizon. Lots of people deride Chamath's SPACs, but several of them traded well above their initial $10 price for 1.5+ years until the market started dropping at the beginning of this year.

Re: SPACs collapse as $11B of deals are called off within an hour

#77

Post by themitigating »

fshbbdssbbgdd wrote: post #73
joshu wrote: post #61

Earlier quoted context omitted.

Huh?

Not the parent, I can’t speak for them. But sometimes I have a paranoid notion that the managerial and legal class have constructed systems where they contain some liability into a black box, then hire someone unknowing to live in the box. The people outside the box are just designing the process and “relying” on the box to behave as expected. The people inside the box don’t know about the context and therefore don’t…

"managerial and legal class" implying people of certain professions are involved in a conspiracy is extremely paranoid.

Re: SPACs collapse as $11B of deals are called off within an hour

#78

Post by fshbbdssbbgdd »

themitigating wrote: post #77
fshbbdssbbgdd wrote: post #73

Earlier quoted context omitted.

Not the parent, I can’t speak for them. But sometimes I have a paranoid notion that the managerial and legal class have constructed systems where they contain some liability into a black box, then hire someone unknowing to live in the box. The people outside the box are just designing the process and “relying” on the box to behave as expected. The people inside the box don’t know about the context and therefore don’t…

"managerial and legal class" implying people of certain professions are involved in a conspiracy is extremely paranoid.

I don’t mean to imply that any set of people is inherently “in on” such a conspiracy. I imagine it would evolve organically and every individual case would be different.

Lawyers get paid to advise people how to avoid legal liability.

Managers get paid to handle problems, and sometimes to recognize which problems the people one level up would rather not know the details of.

I don’t think it’s off base to say that managers and lawyers would be involved where there is a scheme like I describe.

Re: SPACs collapse as $11B of deals are called off within an hour

#80

Post by AlbertCory »

pbreit wrote: post #63
AlbertCory wrote: post #59

Earlier quoted context omitted.

One that I know of is Wheels Up. It's a membership company for flying privately. Private flights are insanely expensive, so at least there's a need. Unfortunately, there are also pretty high costs. No idea what Wheels Up financials look like.

UP probably not the best example of a successful public offering: https://www.google.com/finance/quote/UP:NYSE

where do I say it was successful?

that was an answer to "not really"

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