SPACs Are Booming. These 21 May Be About to Announce Deals

 

Bryan R. Smith/Getty Images

This year has become a boom year for special purpose acquisition companies, or SPACs. Some postmerger returns have been stunning, including those of Nikola Motors, Virgin Galactic, and DraftKings —all of which went public by combining with SPACs. New SPAC issuance is soaring, with multiple initial public offerings a week for several weeks running. And big names like Bill Ackman want in.

More recently, investors have begun bidding up shares of SPACs that have agreed to attractive deals, but months before their combinations close. Tortoise Acquisition (ticker: SHLL), which will merge with electric-truck company Hyliion this fall, has nearly tripled since its deal announcement in June. On Monday, shares of Landcadia Holdings II (LCA), a SPAC sponsored by Landry’s CEO and Houston Rockets owner Tilman Fertitta, said it plans to merge with Fertitta’s Golden Nugget gaming franchise. The stock popped more than 50% in the next two days.

Also known as “blank-check companies,” SPACs raise money from public and private investors and then identify an acquisition target and buy it, typically within two years. Barron’s screened for SPACs that are less than six months from their deadlines (thus might be about to announce deals), and compared their market prices to their current estimated trust value per share.

Expiring SPACs

(Use the scrollbar at bottom to view all columns.)

Source: SPACInsider, FactSet

(If you cannot view the table above, please click here.)

There are 21 SPACs on the market searching for targets that have less than half a year before their completion dates. Of those, just five trade below their estimated trust value as calculated by SPACInsider, a website devoted to research and data about SPACs.

By convention, SPACs sell units in an initial public offering at $10 each, which gives investors a common share and a fraction of a warrant. The cash raised in a SPAC IPO goes into a trust, where it earns interest until the merger is completed. At that time, shareholders can redeem their stock for a proportionate share of the cash in the SPAC’s trust.

That creates a nearly risk-free arbitrage opportunity: buying a SPAC’s shares when they’re trading at a discount to the cash in its trust. By holding through the SPAC’s merger, investors can earn a minimum of that discount plus the yield on U.S. Treasurys that the SPAC holds. If the SPAC’s deal is a dud, or if sponsors can’t find one by the deadline, the shareholder redeems his or her shares and receives the trust value. If the deal is a hit and the shares trade higher than the trust value, investors can sell at the market price.

For example, at a recent $9.99 per share, GreenVision Acquisition Corp. (GRNV) trades for a 1.1% discount to its $10.10 estimated trust value per share. Its deadline is Nov. 21, but the SPAC’s sponsor has the option to extend by three months twice, each time adding 10 cents per share to the trust.

The arbitrage opportunity is simple, and investors can lock in a risk-free—albeit modest—gain. Should investors hold for about five months through GreenVision’s original deadline and redeem for cash, they can receive an annualized 2.64% yield. A one-year Treasury bill yields 0.17%.

The odds of a blockbuster acquisition that causes GreenVision’s stock to soar appear smaller. For starters, the SPAC is on the small side, with just $57.5 million in its trust—it’s targeting a combination with a business valued at $100 million to $300 million in the health care and life science industries. GreenVision’s sponsors are its CEO David Fu and CFO Karl Ye, both with backgrounds in mergers and acquisitions but relatively unknown players, and its underwriter is I-Bankers Securities.

A better chance for a merger-announcement stock pop might come from FinTech Acquisition Corp. III (FTAC), the third SPAC from a team focused on targets in fintech. Its CEO, Daniel Cohen, was involved in the first two FinTech SPACs, and holds board or executive positions at payments and banking firm The Bancorp (TBBK) and investment firm Cohen & Company (COHN). IPO proceeds were $345 million and the SPAC’s deadline is Nov. 20.

Fintech Acquisition I merged with payment processor CardConnect in 2016, and was later acquired by First Data (now Fiserv ) at $15 a share. FinTech Acquisition II combined with International Money Express (IMXI) in 2018. The stock recently traded for $12.61.

That’s a solid record, and the fintech and payments space is just as hot today. But the market expects an attractive deal: Fintech III’s shares recently traded for $11.13, a 7.6% premium to its estimated trust value.

One word of caution, however: If a SPAC can’t consummate a merger within its specified term, its trust is liquidated and returned to stockholders, while warrants expire worthless. That gives sponsors an incentive to get a deal done—but also means investors should pay particularly close attention to transactions announced right before the deadline, when the pressure to find one is highest.

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com

 

The Warrant Report: Great Articles For Your Immediate Attention

By Dudley Pierce Baker
Founder - Editor
http://CommonStockWarrants.com

Hello Investors,

There are so many interesting opportunities for trading stock warrants.

While many of our followers are PM investors, there have been some explosive gains recently in NKLA and NKLAW, Nikola Motors as well as HCCH and HCCHW, HL Acquisition Corp. Thousand of percent gains in the stock warrants within months. These are incredible real gains using stock warrants and I have hyperlinked the charts so you can see for yourself.

If our friends at the technical traders are correct, we should soon be experiencing some great moves higher in gold, silver and mining shares.

If you are not one of many valued subscribers this would be a great time to GET STARTED.

Subscriptions are available for one month, one year, or for a LIFETIME.

 

 

 

 

Recent Articles On Our Websites:

Thanks for being with us on this journey,

 

Election Year Cycles – What To Expect?

June 1, 2020
Chris Vermeulen
TheTechnicalTraders.com


Note from Dudley - These Guys Are Good:

Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

ELECTION YEAR CYCLES – WHAT TO EXPECT?

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

The Warrant Report: Last Week’s Top Articles

By Dudley Pierce Baker
Founder – Editor
http://CommonStockWarrants.com

Investors in the United States are celebrating the Memorial Day Holiday as the Canadian markets continue to trade.

One of my major holdings (warrants) are hitting a high in today’s trading.

Yes, it is possible that gold and some of the miners are getting a little toppy and we could be some give back, but this bull market is still in its early stages, in my opinion, and I continue to search for new opportunities.

JOIN ME NOW – if you are not already one of my valued subscribers.

Top Articles From Our Websites

 

 

RAY DALIO SUGGESTS USA IS ENTERING A PERIOD OF DECLINE AND NEW WORLD ORDER

May 24, 2020
Chris Vermeulen
TheTechnicalTraders.com


Note from Dudley - These Guys Are Good:

Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

RAY DALIO SUGGESTS USA IS ENTERING A PERIOD OF DECLINE AND NEW WORLD ORDER

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

The Warrant Report: This Week’s Top Articles

NASDAQ Sets Up A Massive Head-N-Shoulders

May 12, 2020
Chris Vermeulen
TheTechnicalTraders.com

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

NASDAQ SETS UP A MASSIVE HEAD-N-SHOULDERS

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

Currency and Virus Analysis

Chris Vermeulen

April 30, 2020
Chris Vermeulen
TheTechnicalTraders.com

 

 

 

"...Recently, something very important has happened in the US stock market – a breakout of sorts.  The weakness we expected to see last week prior to the new $500 billion in new stimulus appeared to end this past week.  Not only have the markets opened a bit higher this week, but they have continued to push higher over the past 3+ days.  From a technical standpoint, as long as the support channels and current trends do not falter, the US stock market may continue to push higher before breaking this uptrend...."

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

Q1 GDP DATA WILL LIKELY MASK TRUE GLOBAL ECONOMIC FUTURE, PART II

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

Q1 GDP Data Masking The True Global Economic Future?

Chris Vermeulen

 

April 29, 2020
Chris Vermeulen
TheTechnicalTraders.com

 

 

 

"...As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree.  The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020.  Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020...."

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

Q1 GDP DATA MASKING THE TRUE GLOBAL ECONOMIC FUTURE?

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

WTI Oil Plunges Most On Record

By Dudley Pierce Baker

With todays historic plunge in WTI oil we eagerly await the opinion of our technical go to guy, Chris Vermeulen at TheTechnicalTraders.com.

Chris told us around 12:00PM, eastern time:

..."Oil has been a bell-weather of the global economy for decades.  Higher oil prices suggest demand for oil is strong, and the global economy is clicking right along.  The recent move to levels below $30 somewhat concerned but also expected as the COVID-19 virus event shut down large swaths of the global economy.
I believe the global stock markets have severely mispriced the true consequences of the COVID-19 global economic shutdown and, thus, are continuing to ignore the true risks in the major markets.  I also believe the real outcome of this virus event is a more protracted bottoming event taking place over the next 12 to 24+ months – not some "deep V bottom...."

Chris also, around 2:00PM, closed his long position in the SPY, making a nice profit for his followers.

I suggest you visit their website as we wait for Chris's current opinion on the markets and crude oil.