Interesting. Thanks for the info.
I follow a thread on a Swedish forum on IPO's (as I think I've mentioned before, they're super hyped right now and the IPO forum is teeming accordingly), where they linked to another forum on SPAC's. I first saw the word like a month ago, in Sweden's leading news paper where they said "hey, this new phenomenon is coming to Sweden". Now it already seems like a little mania in the making almost!
All the same, if they come to Sweden, I'll be excited. Sort of like an enhanced IPO, no?
However, the main thing about IPO's is of course the discount they are usually introduced at, causing the exceptional first day returns. In my opinion, they supply a Margin of Safety. For that reason I consider them at least intelligent speculation, with the additional characteristics of special situation investing. (Or investing speculating – that's a good term :-))
(As I understand it, it is way easier for the small investor to partake in IPO's in Sweden than in US –– you often get shares, though seldom more than minimum allotment (~$1000). Still, even with the lowest estimates I've seen, which gives IPO's an average first day return of 5 %––which seems very conservative to me––it still adds up to a pretty staggering annualized return. I think probably even more, in bull markets at any rate, especially for good companies.)
If you get that with SPAC's too, I'm super-excited. First, you get the above-mentioned first day returns; second, they often seem to appreciate in price soon after being issued (whereas IPOs often go down dramatically the following weeks) following a merger rumor and consequent statement; third, that price reaction may or may not be warranted, as you pointed out, and you can choose to sell or stay for the merger. Sounds great. Can't escape the late bull market fraudulent feeling of the investment vehicle though. Seems maybe a little like the CDO's of this bubble (although way less complicated than those – the dark genius of CDO's is just awe-inspiring).
Saw that Pershing Square started a company for those kinds of purposes –– might be interesting to get into... |
