What other tech stock to consider?

[corduroy]

So I just spent more time than I would admit going through the last 80 pages from this thread. There have been several rumors of SPAC mergers given here before the actual mergers were announced, and I was wondering how well someone would do indiscriminately trading on the rumors.

In my analysis below, I assumed you would just buy the stock price, not options, and that you would sell sometime after the peak price was achieved either before the actual merger announcement or right after.

I found four posted rumors, two from @juanmedina and two from @hershey101

On 8/2/20, juanmedina posted a rumor sourced from the WSB reddit that HCAC was going to buy Proterra. You could buy HCAC at a closing price of $10.88 that day. The stock subsequently peaked at $22, and a savvy investor would probably have gotten out at $19/share before the 12/22/20 merger announcement (for Canoo, not Proterra) for a 75% gain over 3+ months.

On 12/4/20, juanmedina posted a rumor from InvestorPlace that QELL was going to buy Proterra. You could have bought QELL at $11.08 that day. No merger has been announced, and QELL is now trading at $11.92 (peaked at $14.35). Chances are, a savvy investor would probably still be holding QELL, leaving you with a 10% downside exposure if QELL doesn't do a merger and liquidates (it would liquidate at $10/share).

On 1/11/21, hershey101 posted a rumor sourced from Bloomberg that CCIV was going to merge with Lucid. It traded at $13.20 that day. CCIV hit a high of $58.05, but you could easily have sold at $57, and indeed still could have sold at about $57 even after the merger was announced on 2/22/21 (and it was with Lucid). That would have netted you a 332% price appreciation in just over a month.

On 1/18/21, hershey101 mentioned in passing that Farady was going to merge with PSAC and you could have bought PSAC for $11.64 that day. The price peaked at $19.16, but a savvy investor could easily have gotten out, even after the merger announcement, at $17 or better, resulting in a 46% appreciation after 10 days.

All in all, buying these SPAC rumors appears to be to a great idea, at least until people catch on and things change. It occurs to me that it is in the original SPAC investor's interests to whisper these rumors so that they can sell their SPAC investment into the ensuing retail buying frenzy.

Thoughts?

Super helpful research. As you have shown, getting in on rumors around announcement plays can be profitable, if you can be in the right place at the right time. Even better if you can be in before the rumor.

My SPAC strategy has evolved into:

- Buy near NAV, pre-announcement SPACs with proven leadership
- Buy units or shares under $11 (capped downside risk at 10%)
- Wait for announcement, sell if you don't like the target. Hold if you do.

If you buy units or shares (not warrants), your risk is only the difference you paid above $10. It's essentially like buying a stock and getting a free put to hedge your risk. Not a bad place to park cash.

Another nice point about units, is you can split off the warrants and sell them at the DA pop, lower your cost basis on the shares if you want to hold them.

(Not advice)

 

[Cosmacelf]

Super helpful research. As you have shown, getting in on rumors around announcement plays can be profitable, if you can be in the right place at the right time. Even better if you can be in before the rumor.

My SPAC strategy has evolved into:

- Buy near NAV, pre-announcement SPACs with proven leadership
- Buy units or shares under $11 (capped downside risk at 10%)
- Wait for announcement, sell if you don't like the target. Hold if you do.

If you buy units or shares (not warrants), your risk is only the difference you paid above $10. It's essentially like buying a stock and getting a free put to hedge your risk. Not a bad place to park cash.

Another nice point about units, is you can split off the warrants and sell them at the DA pop, lower your cost basis on the shares if you want to hold them.

(Not advice)

Well, help us out. When you next buy a SPAC, let us know! Or if any that you've recently bought are still at a good price, also let us know.

 

[Cosmacelf]

BTW, it seems there is a reddit community all about SPACs here: https://www.reddit.com/r/SPACs/

Tons of info I haven't had time to look at yet.

It occurs to me that the reason why the four rumors I posted above did well is because they were all related to an EV merger. Obviously EVs are hot right now. As are space companies (god knows why). Hmmm. Maybe any company in the same sector as one of Elon's companies is the hotness factor . At any rate, the point is that if the SPAC merger rumor is for a materials handling company, I don't think there'll be much price action. So, as usual, these kinds of opportunities don't come along all the time...

 

[corduroy]

Well, help us out. When you next buy a SPAC, let us know! Or if any that you've recently bought are still at a good price, also let us know.

Here are some I have added that are still below $11 (not advice)

CCVI
CVII
MAAC
SCOA
SCOB
CPUH
SRNG

 

[Cosmacelf]

Here are some I have added that are still below $11 (not advice)

CCVI
CVII
MAAC
SCOA
SCOB
CPUH
SRNG

And why those? Mostly based on sponsor reputation, or are there rumors associated with them, or is it the space they are trying to find merger candidates in, or?

 

[Cosmacelf]

And why those? Mostly based on sponsor reputation, or are there rumors associated with them, or is it the space they are trying to find merger candidates in, or?

Actually, let me answer my own question for at least one of the SPAC funds.

In all these SPACs, one of the important DD items is who is actually running the SPAC, or more precisely, who is the deal maker? Do they have the experience, connections, star power and negotiation skills to outbid, outmuscle, or outwork the three billion other SPACs who are no doubt trying to tie up the same juicy hot private companies? We all know Chamath Palihapitiya, but his SPACs (with the iconic names of IPOA, IPOB, etc) have already been bid up quite a lot, just due to his star power.

Right now, a hot series of funds is Churchill Capital Corp, they of CVII fame who are merging with Lucid.

So, it appears that all of the Churchill Capital Corp. funds are run by the same guy, Michael Klein (click for article). He has a great bio to be running SPACs like this. This fireside chat with Klein might be interesting (I haven't listened to it). Let's look at his SPAC track record.

Churchill Capital Corp. was the initial fund and it merged with UK based Clarivate Plc, an information services and analytics company, which provides structured information and analytics for discovery, protection, and commercialization of scientific research, innovations, and brands. Stock information is hard to find for that transaction that took place two years ago, but it doesn't look like there was much price action pre-merger. Post merger, the stock has done fine rising from $10 to $22 in two years.

Churchill Capital Corp II IPOed mid 2019 granting 1/3 warrant coverage at $11.50. Just over a year later in October 2020, they announced a merger with Software Luxembourg Holding S.A. ("Skillsoft"), a global leader in digital learning and talent management solutions. No significant pre-announcement pop, and post announcement the stock (CCX-UN) has traded anemically, currently at $10.70. The transaction has not yet closed.

Churchill Capital III IPOed Feb 14, 2020 with 1/4 warrant coverage at $11.50. July 12, 2020, they agreed to merge with Multiplan which provides data analytics and technology-enabled cost management solutions to the U.S. healthcare industry. No price spike, the merger went through and Multiplan stock (MPLN) is now trading at $7.11.

Churchill Capital IV (CVII) is the one we've all been talking about - it just announced a merger with Lucid, and punters made a boatload of money from it.

The rest of the funds (V, VI and VII) have raised IPO money but haven't announced any merger candidates yet.

So, pretty mixed bag. Again, it seems to confirm my thesis that post IPO, you can only make money from these if the SPAC invests in a really hot stock.

 

[corduroy]

And why those? Mostly based on sponsor reputation, or are there rumors associated with them, or is it the space they are trying to find merger candidates in, or?

It's a mix of things: market cap, volume, momentum, dealmaker reputation, projected targets, risk profile, and how it fits into my overall portfolio. A great site to start research is here. You can download CSVs to sort and filter your own spreadsheets.

The biggest downside is parsing through the massive amount of info doing DD. It's very time consuming.

Actually, let me answer my own question for at least one of the SPAC funds.

In all these SPACs, one of the important DD items is who is actually running the SPAC, or more precisely, who is the deal maker? Do they have the experience, connections, star power and negotiation skills to outbid, outmuscle, or outwork the three billion other SPACs who are no doubt trying to tie up the same juicy hot private companies? We all know Chamath Palihapitiya, but his SPACs (with the iconic names of IPOA, IPOB, etc) have already been bid up quite a lot, just due to his star power.

Right now, a hot series of funds is Churchill Capital Corp, they of CVII fame who are merging with Lucid.

So, it appears that all of the Churchill Capital Corp. funds are run by the same guy, Michael Klein (click for article). He has a great bio to be running SPACs like this. This fireside chat with Klein might be interesting (I haven't listened to it). Let's look at his SPAC track record.

Churchill Capital Corp. was the initial fund and it merged with UK based Clarivate Plc, an information services and analytics company, which provides structured information and analytics for discovery, protection, and commercialization of scientific research, innovations, and brands. Stock information is hard to find for that transaction that took place two years ago, but it doesn't look like there was much price action pre-merger. Post merger, the stock has done fine rising from $10 to $22 in two years.

Churchill Capital Corp II IPOed mid 2019 granting 1/3 warrant coverage at $11.50. Just over a year later in October 2020, they announced a merger with Software Luxembourg Holding S.A. ("Skillsoft"), a global leader in digital learning and talent management solutions. No significant pre-announcement pop, and post announcement the stock (CCX-UN) has traded anemically, currently at $10.70. The transaction has not yet closed.

Churchill Capital III IPOed Feb 14, 2020 with 1/4 warrant coverage at $11.50. July 12, 2020, they agreed to merge with Multiplan which provides data analytics and technology-enabled cost management solutions to the U.S. healthcare industry. No price spike, the merger went through and Multiplan stock (MPLN) is now trading at $7.11.

Churchill Capital IV (CVII) is the one we've all been talking about - it just announced a merger with Lucid, and punters made a boatload of money from it.

The rest of the funds (V, VI and VII) have raised IPO money but haven't announced any merger candidates yet.

So, pretty mixed bag. Again, it seems to confirm my thesis that post IPO, you can only make money from these if the SPAC invests in a really hot stock.

You are correct, knowing the dealmaker and the team running the SPAC is key. The Ackmans, Kliens, and Chamaths of the game are the superstars, but their deals won't all be winners. My theory is that since you are dealing with a level of uncertainty, its really a numbers game. I am in 19 SPACs right now in various stages. I don't have to be right on all of them, just a few. As long as the entry points are good, risk is manageable.

I expect to be left with some winners that I really like and want to hold long term, like Chamath's IPOE/SoFi and IPOB/OPEN, which I plan to hold at least 5 years. GHVI/Matterport (real estate tech) is another I plan to hold after the merger. If PSTH goes with Stripe, that would be another long term hold. With CCIV/Lucid I broke all my rules and got caught up in the hype, still not sure if I want to hold Lucid long term.

 

[ZeApelido]

No idea - that's a lot of stocks to pour over.

You were waaaaaay late, but you did finish the SPAC analysis I requested. Thanks!

 

[DLAv8r]

$TSNPD soon to be $HMBL
Humbl pay fintech stock using blockchain for cross border transfers.

think SQ or PayPal, but not limited to US.

it’s an OTC to be uplisted to nasdaq this year.

For Spacs

BFT-DA paysafe
WPF- yet to announce target

Foley has a great team and track record.

 

[chronoreverse]

Not advice but Rocket Lab is merging with SPAC VACQ to go public. I've always liked Rocket Lab's Electron rocket (it uses lithium battery powered pumps instead of traditional turbopumps) and they've had numerous successes unlike many of the "paper rockets" that are hyped all the time.

I actually doubt this will be a big opportunity in terms of profit but it's just something I want to invest in.

 

[Cosmacelf]

Not advice but Rocket Lab is merging with SPAC VACQ to go public. I've always liked Rocket Lab's Electron rocket (it uses lithium battery powered pumps instead of traditional turbopumps) and they've had numerous successes unlike many of the "paper rockets" that are hyped all the time.

I actually doubt this will be a big opportunity in terms of profit but it's just something I want to invest in.

Thanks, but I needed your post on Friday

 

[chronoreverse]

Thanks, but I needed your post on Friday

Same, that's why I said it's probably not a quick profit opportunity. But I actually like this company in the classical non-meme way.

 

[Buckminster]

WSB pushing RKT. Any good?

 

[bkp_duke]

Sensonics (SENS) is up today on a new patent award:
United States Patent: 10932703

Integrated optical filter system with low sensitivity to high angle of incidence light for an analyte sensor

Abstract
Apparatuses and methods for improving the accuracy of an analyte sensor are disclosed. The sensor may include a photodetector and a low angle sensitive (LAS) optical filter. The photodetector may be configured to convert received light into current indicative of the intensity of the received light. The LAS optical filter may be configured to prevent light having a wavelength outside a band pass region from reaching the photodetector and to pass light having a wavelength within the band pass region to the photodetector. The percentage of light passing through the LAS optical filter may decrease as the angle of incidence of the light increases.


I bought back in after selling last week at $4.10.

 

[bxr140]

Not sure I've sen this here:

 

[Buckminster]

WSB pushing RKT. Any good?

I bought in - up 57% today - I didn't get all of it though.

45% of float shorted. WSB all over it. What will RH etc. do this time?
https://twitter.com/ihors3/status/1366818620098150403

 

[chronoreverse]

I had a small number of shares at just below $24 when I heard about the special dividend but I sold it all today because I don't really feel like timing another meme-stock spike.

If everything calms down again then it seems like a profitable fintech so I might invest again.

 

[Boomer19]

BTW, it seems there is a reddit community all about SPACs here: https://www.reddit.com/r/SPACs/

Tons of info I haven't had time to look at yet.

It occurs to me that the reason why the four rumors I posted above did well is because they were all related to an EV merger. Obviously EVs are hot right now. As are space companies (god knows why). Hmmm. Maybe any company in the same sector as one of Elon's companies is the hotness factor . At any rate, the point is that if the SPAC merger rumor is for a materials handling company, I don't think there'll be much price action. So, as usual, these kinds of opportunities don't come along all the time...

take by dude on twitter on this spac craze versus last spac craze
https://twitter.com/urbankaoboy/status/1366808331055063040?s=21

 

[Cosmacelf]

take by dude on twitter on this spac craze versus last spac craze
https://twitter.com/urbankaoboy/status/1366808331055063040?s=21

Wow. Everyone needs to read that. Really good info. My take: SPACs are going to be desperate for any private company that has a pulse in about a year to 18 months from now. If you are running a private company right now in anything approaching a hot sector (like genomics), SPACs are going to be knocking at your door...

 

[ckessel]

What a difference a few weeks makes. Pretty much every thing mentioned here was going great initially and is deeply underwater now after the last few weeks. ABML, NNDM, ONTF, pretty much any symbol we've talked about. Many down 40-50% off their highs (like NNDM).

We're all brilliant riding the bull, all idiots when the bear arrives.