It appears the SPACs boom is coming to an end ? The WSJ looked at the SPAC landscape in an article last weekend, The SPAC ship is sinking. Investors want their money back (Amrith Ramkumar, Jan 21, 2021).

A number of companies are now withdrawing from previously announced SPAC deals, even though they sometimes have to pay millions of dollars to the SPAC for backing out. Savings and investing app Acorns Grow Inc. was the latest to do so, ending its roughly $2.2 billion SPAC agreement on Tuesday and becoming the 10th company to terminate a SPAC deal since early November, according to Dealogic. There were 13 SPAC-deal terminations in the first 10 months of last year.Announced valuations of companies that ​recently terminated SPACs.

Other companies to end deals recently include billionaire Tilman Fertitta’s Fertitta Entertainment Inc.—a holding company for Golden Nugget casinos and Landry’s restaurants—financial trade clearing firm Apex Clearing Holdings LLC and drug-development technology firm Valo Health LLC.

Low share prices mark a particularly acute threat to SPACs because they can trigger a negative spiral. Investors who put money into a SPAC before it announces a deal don’t know what type of merger it will do, so they are allowed to withdraw their money before a deal goes through. The amount they withdraw typically comes out to the SPAC’s listing price of $10, plus a tiny bit of interest.

Nearly 95% of investors in the SPAC that took BuzzFeed Inc. public last month pulled their money out, leaving the digital-media outlet with just $16 million from the SPAC’s original $287.5 million. BuzzFeed also raised $150 million in convertible-note financing as part of the deal. Shares have since slumped roughly 60% to about $4.”

WSJ

Is this the end of the SPAC boom or just the losers get flushed out ?

Let’s just be real. Chamath isn’t budging on his billions of dollars, even if the SEC said SPACs should treat warrants as liabilities on their balance sheets rather than equity, forcing IPOE and many SPACs to restate their financials.

Friendly reminder: this is the 450th post we are writing here, celebrating 8 years of service.

SPACS Lord Chamath is portrayed in the first June issue of The New Yorker.

Of hedge-fund managers: “Let them get wiped out. Who cares? They don’t get to summer in the Hamptons? Who cares?” (He made both proclamations after he had become a venture capitalist and started a hedge fund; he has yachted off the Italian coast.)

"In 2019, when he was trying to persuade investors to support his first spac—for the space-tourism company Virgin Galactic—he met in New York with a group of mutual-fund managers and gave a dazzling speech about helping mankind reach for the heavens. It went unmentioned that Virgin Galactic had burned through nearly a billion dollars, and that in its fifteen-year history it had missed every major deadline that it had set for itself. Instead, Palihapitiya proclaimed that the company would likely earn enormous profits—and change the world." -The New Yorker

What else is there to say ? That this Joker slides on slime ?

“Having a great story, and knowing how to tell it, can be a quick way to get rich. “

The New Yorker

And now a quote from me:

People are stupid. You can always bet on people’s stupidity.

Don’t blame Chamath that he possibly is worth more than Michael Milken (whose net worth is $3.7 Bn). Blame yourselves and your own stupidity. At least Michael Milken is a genius. Chamath is the Joker of Silicon Valley.

“Over the coming decades, however, agility will take on a new meaning: the ability to explore multiple domains at once and combine them into something that produces value. We’ll need computer scientists working with cancer scientists, for example, to identify specific genetic markers that could lead to a cure. To do this, we’ll need to learn how to go slower to have a greater impact.”

Greg Satell

Does anyone in Silicon Valley listens to it ?

I doubt it.

Silicon Valley is on a SPAC ramp to scale and burn, fueled by the gasoline of SPAC fever.

We warned about the SPAC burning furnace for months.

Tech is the cat with seven lives and seven lies.

“It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment. ” –SEC released note: Celebrity Involvement with SPACs – Investor Alert.

"Consider a $300 million financing deal to complete the merger of NewHold Investment, a SPAC, with Evolv Technology. It included a number of hedge funds but also several famous athletes, such as the tennis power couple Steffi Graf and Andre Agassi and the soon-to-be Hall of Fame quarterback Peyton Manning." -The New York Times

Colin Kaepernick, Alex Rodriguez, they’re all in it.

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There will always be those -albeit few-who make more money than God when the economy goes to shit.

“In the space of three weeks, as Covid-19 was engulfing the globe, Ackman turned a $27 MM premium paid to buy credit default sweeps into a profit of $2.6 Billion. He then reinvested a chunk of that windfall in the long-term positions he wanted to protect by buying the insurance in the first place. Ackman made another $1 Bn.”

WSJ, Sept. 29, 2020 (William D. Cohan)

On an IRR basis, Ackman’s trade is the Greatest Trade of All Time: 100 X his money in 10 days.

In July, Ackman raised the largest SPAC with $4 Bn as we have already pointed in this blog.

“In typical Ackman fashion, he also tried -and failed- to use the SPAC to buy Airbnb and Stripe. Another perfect fit for his SPAC, from his perspective, would be Bloomberg.”

WSJ

Even 28-years are becoming billionaires today.

Covid-19 making riches faster than the speed of light.

“The rough rule of thumb is 2% of the SPAC value, plus $2 million.”

and the 2nd most asked question, why is the unit price of SPACs $10.

The Gold market basics were nicely outlined in a WSJ article recently (Joe Wallace, Aug. 17th, 2020). Describing the gold market doesn’t get any clearer than that.

Excerpts:

That Old Snikeroo Buffett selling airlines shares and buying gold…he knows what he’s doing.

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