All things STOCKS

#7,076
#7,076
Thunder Good-Oil said:
So if a company worth $50 million is acquired by a SPAC and it’s suddenly going to be worth $100 million? The terms coin flip, pump and dump, and bag holders come to mind.
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Again, if I come close to doubling my money over the course of a few months, what do I care? Get in with a good entry and there’s no risk of you ever being a bag holder.
 
#7,078
#7,078
Thunder Good-Oil said:
So if a company worth $50 million is acquired by a SPAC it’s suddenly going to be worth $100 million? The terms coin flip, pump and dump, and bag holders come to mind.
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Taking a private company public makes more sense to me. But is it a good company or just a show? I suspect many SPACs are in it for the founders, not the investors.
I own PSTH and Dgnr.
 
#7,080
#7,080
SPACs also have a fairly low downside too, as they pretty much trade around their net asset value. The issue with trading them is that in the past they have typically trade sideways until the merger date, meaning they have a fairly limited upside. Technically they do make money off interest. I'd rather not hold through the merger date, but a swing trader can make a nice chunk of change if played right.


I not as high on them as Tri-citiesVol, but they're becoming increasingly popular for the retail investor. If you can get in a good price point, it's a decent way to minimize risk with nice upside of 20-30% (or higher in some cases) if it does happen to get pumped.
 
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#7,081
#7,081
Thunder Good-Oil said:
Zero sum. It’s pure gambling. Good luck.
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Think it depends on the SPAC. There's some obviously that fall into this criteria. There's some more like Draft Kings (DKNG) that has grown in share price as more states have legalized/approved sports betting...

There are some (LCA) that refer to the point @Go aeiou made. That SPAC benefits Tilman Fertita as he attempts to keep his casino, restaurant, hotel, and Houston Rockets empires afloat. LCA rode the tailwinds of DKNG but if you look at what's inside that SPAC, it's some junk to go along with the online business of Golden Nugget.
 
#7,082
#7,082
I have 2 SPACs in my portfolio currently. CCX and IGAC. Both averages are near their base asset value (around $10). I don't mind holding for a little while to see if they can reach $11-12 or more. If I find another stock I really like in the meantime, I can always sell those stocks and pocket any nominal gains (and I won't sweat any losses <1%)
 
#7,083
#7,083
BigOrangeMojo said:
Think it depends on the SPAC. There's some obviously that fall into this criteria. There's some more like Draft Kings (DKNG) that has grown in share price as more states have legalized/approved sports betting...

There are some (LCA) that refer to the point @Go aeiou made. That SPAC benefits Tilman Fertita as he attempts to keep his casino, restaurant, hotel, and Houston Rockets empires afloat. LCA rode the tailwinds of DKNG but if you look at what's inside that SPAC, it's some junk to go along with the online business of Golden Nugget.
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It absolutely does depend on the SPAC. When the plan is announced then the bidding is based on the merits of the targeted acquisition. It’s just spaculation to buy them when their plans aren’t disclosed. Especially when the reason given to purchase is because the SPAC share price is under $11.
 
#7,084
#7,084
Carp said:
I have 2 SPACs in my portfolio currently. CCX and IGAC. Both averages are near their base asset value (around $10). I don't mind holding for a little while to see if they can reach $11-12 or more. If I find another stock I really like in the meantime, I can always sell those stocks and pocket any nominal gains (and I won't sweat any losses <1%)
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But are the SPACs trading near their bases or are they now being bid up by the Robinhood mob?
 
#7,085
#7,085
Thunder Good-Oil said:
But are the SPACs trading near their bases or are they now being bid up by the Robinhood mob?
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Yes they are. The base price of the SPAC stock is not at the risk of the volatility of the market, which is why you saw SPACs remain largely unphased during the March crash. Unlike an IPO which can see an IPO pop then crash hard, a SPACs main benefit (other than affordability going public) is the protection of a steady price point based on the initial offering (for IGAC it was 30 million shares at $10/share). The initial investment into the SPAC is placed into escrow while they seek an acquisition, and they have 2 years to do so, or the money must returned to those investors.

Like anything, your shares are only worth what someone will pay for them. But there's a pretty large safety net here, though again, the upside is fairly limited until after the merger.
 
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#7,086
#7,086
Thunder Good-Oil said:
It absolutely does depend on the SPAC. When the plan is announced then the bidding is based on the merits of the targeted acquisition. It’s just spaculation to buy them when their plans aren’t disclosed. Especially when the reason given to purchase is because the SPAC share price is under $11.
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This is true. Investing in a SPAC just because it is under $11 is not a good idea.
 
#7,087
#7,087
Carp said:
This is true. Investing in a SPAC just because it is under $11 is not a good idea.
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Most SPACs hover in the 10-11 zone until a merger is announced, which is why I said if you find one until $11 it’s basically free money with not much risk involved.
 
#7,089
#7,089
Tri-CitiesVol said:
Most SPACs hover in the 10-11 zone until a merger is announced, which is why I said if you find one until $11 it’s basically free money with not much risk involved.
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It's not quite that simple. There is still some risk involved, and it depending on the SPAC it could be nearly 2 years before an acquisition is even made, which is quite a while to be holding a bag. Also, the market may not react the way you think it will with merger news. If the market is less than thrilled with the merging company, it could certainly nose dive quickly. Check out $AVCT or $PECK for reference.

It's been a great year for SPACs overall, I enjoy playing them, but there is certainly risk involved and getting into one ONLY because it's under $11 isn't a smart play.
 
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#7,092
#7,092
Carp said:
Again, there are plenty of examples of SPACs flopping before the merger. Getting in below $11 does not guarantee you profits.
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I haven’t seen any since I started, but even if the merger doesn’t go through, your funds are returned. I see no downside.
 
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