No new SPAC S-1's yesterday and only one deal -- Union Acquisition Corp II (LATN) agreeing to a $1.1B EV deal with Procaps, a LatAm Pharmaceuticals company -- gives continued relief to overwhelmed SPAC investors. Everyone in the SPAC market had simply become exhausted by the pace of new filings, new IPOs, and often irrational prices.
With the market slowing, investors will have an opportunity to take a breath and do their homework to (a) identify high conviction SPACs and (b) carefully monitor them across the lifecycle to take advantage of the inherent yield plus optionality play that SPACs offer.
4 Things To Watch For
- Price: look for pre-deal SPACs at or below $10 to generate yield and give you optionality. If there is an announced deal, be careful on entry and make sure you don't get caught in the hype around deal announcement.
- Team / Sponsor: Look carefully at the team and sponsor's track record. Many SPACs have repeat sponsors or individuals that are on their second, third or more SPAC. Also pay attention to their expertise. Do they have a good mix of (successful) operators and investors/bankers?
- Structure: The SPAC structure should increasingly transition to a more shareholder friendly one where promote and exits are tied to longer-term and more meaningful targets.
- Macro Events: Biden's $2.25 trillion new deal could be a boon for electric vehicles (EV), sustainability plays, and infrastructure related SPACs. Or, New York's legalization of Cannabis may have a positive SPAC impact.
Also, be careful as SPACs with announced deals get close to and even drop below $10. For example, Reinvent Technology Partners Z (RTPZ) dipped below $10 on Wednesday before closing the day at $10.01. It will take a solid PIPE to get these deals done which, especially in this environment, will put some pressure on the deal and, in some cases, may not go through.
Potential SPAC Opportunities
Remember, do you diligence on any and all SPACs before you add them to the basket. There are a lot of options in the market so don't just buy on one factor, but put together a high conviction narrative based on multiple factors.
Biggest SPAC Equity Discounts
-4.50% ~ $ 9.55 | RPLA - Replay Acquisition Corp. (Announced)
-4.30% ~ $ 9.57 | AGAC - African Gold Acquisition Corporation (Pre-Deal)
-4.00% ~ $ 9.60 | BLTS - Bright Lights Acquisition Corp. (Pre-Deal)
-3.90% ~ $ 9.61 | FINM - Marlin Technology Corp (Pre-Deal)
-3.80% ~ $ 9.62 | AKIC - Sports Ventures Acquisition Corp. (Pre-Deal)
-3.80% ~ $ 9.62 | CHFW - Consonance-HFW Acquisition Corp (Pre-Deal)
-3.80% ~ $ 9.62 | SSAA - Science Strategic Acquisition Corp. Alpha (Pre-Deal)
-3.72% ~ $ 9.63 | MON - Monument Circle Acquisition Corp (Pre-Deal)
-3.70% ~ $ 9.63 | ADEX - ADIT EDTECH ACQUISITION CORP. (Pre-Deal)
-3.70% ~ $ 9.63 | ADRA - Adara Acquisition Corp. (Pre-Deal)
-3.60% ~ $ 9.64 | PUCK - Goal Acquisitions Corp. (Pre-Deal)
-3.60% ~ $ 9.64 | ASAX - Astrea Acquisition Corp. (Pre-Deal)
-3.60% ~ $ 9.64 | SWET - Athlon Acquisition Corp. (Pre-Deal)
-3.60% ~ $ 9.64 | OSTR - Oyster Enterprises Acquisition Corp. (Pre-Deal)
-3.52% ~ $ 9.65 | SHAC - SCP & CO Healthcare Acquisition Company (Pre-Deal)
Buy the Dip? Yesterday's Biggest Decliners
-3.76% ~ $ 11.79 | HOL - Holicity Inc (Announced)
-3.70% ~ $ 26.58 | STPK - Star Peak Energy Transition Corp (Announced)
-3.50% ~ $ 11.59 | AONE - one (Announced)
-3.27% ~ $ 12.12 | DFHT - Deerfield Healthcare Technology (Announced)
-2.95% ~ $ 9.55 | RPLA - Replay Acquisition Corp. (Announced)
-2.56% ~ $ 10.29 | EXPC - Experience Investment Corp (Announced)
-2.51% ~ $ 16.31 | NGA - NORTHERN GN ACQ (Announced)
-2.29% ~ $ 13.23 | SRAC - Stable Road Acquisition Corp. (Announced)
-2.21% ~ $ 35.42 | BRPA - Big Rock Partners Acquisition Corp (Announced)
-1.90% ~ $ 10.83 | AHAC - Alpha Healthcare Acquisition Corp (Announced)
-1.76% ~ $ 9.63 | MON - Monument Circle Acquisition Corp (Pre-Deal)
-1.70% ~ $ 9.81 | HCII - HUDSON EXECUTIVE INVESTMENT CORP. II (Pre-Deal)
-1.64% ~ $ 9.62 | CHFW - Consonance-HFW Acquisition Corp (Pre-Deal)