Key SPAC Inflection Points: Deal Pops and Ex-Redemptions
Investors need to be aware of the key inflection points for SPACs in order to take advantage of the yield + optionality approach. Two important points are deal announcements and ex-redemptions.
Deal announcements are an opportunity for positive upside based on the excitement about a merger combination (e.g. CCIV / Lucid). In today's SPAC environment deal pops have been much more tepid and, at times, negative so it isn't a slam dunk flip point.
The three SPAC merger deals announced each had positive deal pops -- AJAX I (AJAX), CM Life Sciences II (CMIIU), and QELL with +4%, +8%, and +2% respectively -- so investors will want to watch for more early morning announcements. If there is a pop, the next decision is whether to capitalize on it or hold. A lot depends on the conviction around the deal's narrative, but many will exit post-pop if recent history is a guide.
The ex-redemption date is the point where investors who buy a share today will not have it settle in time for it to qualify for redemption at the deadline. So, newer SPAC investors may be surprised to learn that, in those instances, there is no longer a floor at $10 and they are at the mercy of the equity markets.
As we discussed in last night's wrap, this is exactly what happened to Collective Growth Corporation (CGRO) yesterday.
Potential SPAC Opportunities
Remember, do you diligence on any and all SPACs before you add them to the basket. And, especially remember to track key inflection points like deal announcements and ex-redemption dates and trade accordingly.
SPAC Equity at the Biggest Discount
-4.10% ~ $ 9.59 | LHC - Leo Holdings Corp. II (Pre-Deal)
-4.10% ~ $ 9.59 | AGAC - African Gold Acquisition Corporation (Pre-Deal)
-4.00% ~ $ 9.60 | ISLE - Isleworth Healthcare Acquisition Corp. (Pre-Deal)
-4.00% ~ $ 9.60 | ASAX - Astrea Acquisition Corp. (Pre-Deal)
-3.90% ~ $ 9.61 | MTAC - MedTech Acquisition Corporation (Pre-Deal)
-3.90% ~ $ 9.61 | IGNY - Ignyte Acquisition Corp. (Pre-Deal)
-3.80% ~ $ 9.62 | AKIC - Sports Ventures Acquisition Corp. (Pre-Deal)
-3.70% ~ $ 9.63 | ADEX - ADIT EDTECH ACQUISITION CORP. (Pre-Deal)
-3.70% ~ $ 9.63 | CLAS - Class Acceleration Corp. (Pre-Deal)
-3.65% ~ $ 9.64 | ADER - 26 Capital Acquisition Corp (Pre-Deal)
-3.60% ~ $ 9.64 | PUCK - Goal Acquisitions Corp. (Pre-Deal)
-3.50% ~ $ 9.65 | JCIC - Jack Creek Investment Corp. (Pre-Deal)
-3.50% ~ $ 9.65 | POW - Powered Brands (Pre-Deal)
-3.50% ~ $ 9.65 | SWET - Athlon Acquisition Corp. (Pre-Deal)
Buy the Dip? Yesterday's Biggest Decliners
-11.92% ~ $ 36.22 | BRPA - Big Rock Partners Acquisition Corp (Announced)
-9.26% ~ $ 12.25 | HOL - Holicity Inc (Announced)
-8.04% ~ $ 9.26 | CGRO - Collective Growth Corp (Announced)
-7.26% ~ $ 13.54 | SRAC - Stable Road Acquisition Corp. (Announced)
-5.35% ~ $ 13.10 | RSVA - Rodgers Silicon Valley Acquisition Corp (Announced)
-4.84% ~ $ 12.20 | THCB - Tuscan Holdings Corp. (Announced)
-3.80% ~ $ 11.40 | VACQ - Vector Acquisition Corp (Announced)
-3.47% ~ $ 10.29 | SFTW - Osprey Technology Acquisition Corp. (Announced)
-2.68% ~ $ 10.55 | GWAC - Good Works Acquisition Corp (Announced)
-2.62% ~ $ 9.68 | EQHA - EQ Health Acquisition Corp (Pre-Deal)
-2.61% ~ $ 10.08 | DGNU - Dragoneer Growth Opportunities Corp. III (Pre-Deal)
-2.53% ~ $ 10.39 | AJAX - Ajax I (Announced)
-2.49% ~ $ 11.35 | AGC - ALTIMETER GROWTH CORP (Pre-Deal)