This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hedge Funds Find Arb Opportunity in SPACs

In a fact sheet about the fund, which engages in several arbitrage strategies, AQR outlined plans to take advantage of a lack of liquidity in the "thinly traded" SPAC market. A spokesman for AQR says the firm is not concerned that it missed the height of the market last fall, since it expects attractive risk-adjusted returns for some trades.

One investor in the fund, Lee Munson, was excited about the prospects, and the fact that AQR's fees -- which are capped at 1.5% for Class-N shares and 1.2% for Class-I shares -- are much lower than the huge costs assessed by hedge funds when markets were booming.

" I love it because there's none of this two-and-20 crap," says Munson, referring to the 2% management fee and 20% performance fee that hedge funds were known for charging.

Another question lingers for SPAC returns: Whether the M&A and IPO markets will recover any time soon. Schneider says about 740 SPACs trade on the market today, but new launches have slumped significantly as M&A activity seized up amid a lack of financing last year. Most of the few deals announced were voted down by SPAC shareholders. They preferred to reclaim original investments, rather than take a chance of loss in the IPO market.

The result was a downward trend in SPAC launches, which started climbing in 2005. That year, the number of launches more than doubled from 12 to 28, and average gross proceeds climbed from $485 million to $2.11 billion, according to The market reached a height of 66 SPACs and average gross proceeds of $12.09 billion in 2007, but has since come crashing down to 17 launches and $3.84 billion in proceeds last year.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AIG $63.15 0.05%
BAC $17.44 -0.17%
C $54.08 -0.18%
JPM $66.86 0.12%
WFC $55.22 -0.11%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs