A (small) Pickup in SPAC Activity & De-SPAC Returns

A small pickup in SPAC activity this week with a few deals and an IPO today. Also, de-SPAC returns can be misleading and shouldn't be the only focus.
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SPAC activity has picked up this week with three deals announced and a new SPAC IPO today. Yesterday's deals with MRAC and GLEO fell flat and so while investors will have been excited to see deals getting done, they were disappointed that there was no deal pop along with it. 

Cathie Wood and ARK Swoop in on Galileo (GLEO)

However, there was at least one big investor excited by Galileo Acquisition Company's (GLEO) announced acquisition of Shapeways as Cathie Wood's ARK Autonomous Technology & Robotics ETF (ARKQ) purchased over 500k shares of GLEO yesterday, representing about 1/3 of total volume traded, for > $5mm. 

ARKQ is currently holding other 3D printing SPAC deals, including: Jaws Spitfire (SPFR) -- pending deal with VELO3D, one (AONE) -- pending deal with Markforged while also supporting aviation SPACS: Experience Investment Corp (EXPC) -- pending deal with Blade Urban Mobility and Atlas Crest Acquistion (ACIC) -- pending deal with Archer Aviation. 

While the market mostly brushed off the announcement yesterday, having a force such as ARK behind your deal could help provide support as the de-spac company takes hold in the public market. Sometimes the retail market forgets that these are real companies (current revenues or not) with prospects for future growth that could pay huge to be in early.  

Wood's ARKG recently bought CMIIU / SomaLogic as well. So, watch for more as for more as there are a lot of "disruptive" SPAC stocks and many are trading at levels where making big bets could pay off.

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Returns Since De-SPAC May not be the Right Measure

The overall mood in SPAC land remains dour with most of the media claiming SPACs are dead and limited positive news coming out to drive a different narrative. Many are pointing to the performance of SPACs post de-SPAC as a primary reason for the mood. 

We took a quick look and, yes, post de-SPAC returns can be disappointing, but investors should not overlook the performance since IPO. In the below chart, investors will see that for the majority of SPACs that de-SPAC'd in 2021 the return since IPO is positive (any SPAC to the right of the vertical 0) despite being down after the de-SPAC (any SPAC under the horizontal 0).

Note that Playboy's (PLBY) returns are so outsized (up almost 400% since IPO and over 280% since de-SPAC) that we had to add them as a note in the top right corner of the chart.

Yes, post de-SPAC returns are disappointing, but is that when we should start measuring?

Yes, post de-SPAC returns are disappointing, but is that when we should start measuring?

So, the ultimate maxim for investing holds true: buy low and sell high. Translating to SPAC investing that means buying SPACs around NAV, capitalizing on upside (e.g. deal pops, positive news pops), and selling at the right high. Those that got in during peak SPAC will have entered many of these SPACs at their highs and are now fueling a more fatalistic mood.

A SPAC IPO

Big Sky Growth Partners successfully priced a $300M IPO, with Goldman underwriting. Will trade as BSKY/U and the units came along with 1/4 warrant. It will target companies in the internet retail / D2C space. It is led by CEO Mark Vadon, co-founder of Zulily and the board includes Allbirds executives and Liberty/Qurate veterans.

Other items of note:

  • STPK starts trading as STEM today
  • SRAC reminding shareholders to vote (and note the below...)
  • THCB extension vote didn't get enough participation and now is on May 10

Wednesday's Biggest Decliners
-5.74% ~ $ 11.49 | THCB - Tuscan Holdings Corp. (Announced)
-5.39% ~ $ 42.10 | BRPA - Big Rock Partners Acquisition Corp (Announced)
-4.84% ~ $ 10.62 | HSAQ - Health Sciences Acquisitions Corporation 2 (Pre-Deal)
-4.48% ~ $ 17.07 | ACTC - ArcLight Clean Transition Corp (Announced)
-3.35% ~ $ 10.10 | NOAC - Natural Order Acquisition Corp (Pre-Deal)
-3.31% ~ $ 11.41 | FTCV - FinTech Acquisition Corp. V (Announced)
-2.57% ~ $ 10.24 | PDAC - Peridot Acquisition Corp (Announced)
-2.48% ~ $ 13.37 | AGC - ALTIMETER GROWTH CORP (Announced)
-2.40% ~ $ 9.76 | VPCC - VPC Impact Acquisition Holdings III, Inc. (Pre-Deal)

Wednesday's Biggest Gainers
11.06% ~ $ 11.05 | VSPR - Vesper Healthcare Acquisition Corp (Announced)
8.15% ~ $ 13.27 | CMII - CM Life Sciences II Inc. (Announced)
7.70% ~ $ 13.70 | CLII - Climate Change Crisis Real Impact I Acquisition Corp (Announced)
6.00% ~ $ 16.43 | RICE - Rice Acquisition Corp. (Announced)
5.56% ~ $ 16.71 | MUDS - Mudrick Capital Acquisition Corporation II (Announced)
4.22% ~ $ 9.38 | GIK - GigCapital3 Inc (Announced)
3.64% ~ $ 13.39 | TDAC - Trident Acquisitions Corp (Announced)
3.51% ~ $ 10.33 | ROCC - Roth CH Acquisition II Co. (Announced)
3.09% ~ $ 10.01 | IPVA - InterPrivate II Acquisition Corp. (Pre-Deal)

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