What is a SPAC and Why Should You Care?

by Fred Fuld III

If you haven’t heard the term, SPAC, as an investor, you should at least be aware of what it is. SPAC stands for Special-Purpose Acquisition Company, which is a company created specifically to pool funds in order to finance a merger or acquisition opportunity within a set timeframe, usually two years.

SPACs are sometimes referred to as corporate shells or blank-check companies. They have no operations but go public with the intention of merging with or acquiring a company with the proceeds that were raised from the SPAC’s initial public offering. The SPACs are currently sold in $10 units which includes of one share of common stock and one or more out of the money warrants or a fraction of a warrant. The units, stocks, and warrants usually start trading on either the NYSE or NASDAQ.

Probably the most famous SPAC (which no one remembers the original name of but most remember the new name after the merger) was Social Capital Hedosophia (former symbol: IPOA). This is the company that merged with Richard Branson’s Virgin Galactic (SPCE), the space travel company.

The most recent SPAC transaction hitting the news is the merger of the SPAC called Diamond Eagle Acquisition Corp. (DEAC) with DraftKings (DKNG), one of the world’s largest daily fantasy sports contest and sports betting provider.

Here are a list of SPACs that have announced mergers:

SPAC Symbol Buying Business
8i Enterprises Acquisition Corp. JFK Diginex blockchain
Act II Global Acquisition Corp. ACTT Merisant sugar substitute
Arya Science Acquisition Corp. ARYA Immatics cancer immunotherapies
Diamond Eagle Acquisition Corp. DEAC DraftKings fantasy sports
Far Point Acquisition Corporation FPAC Global Blue airport sales tax refund kiosks
Gordon Pointe Acquisition Corp. GPAQ HOF Village Pro Football Hall of Fame
KBL Merger Co. IV KBLM CannBioRx Life Sciences biotech
Legacy Acquisition Corp. LGC Blue Valor digital marketing
Leisure Acquisition Corp. LACQ Gateway Casinos gambling
Monocle Acquisition Corporation MNCL AerSale Aviation Aftermarket
Mudrick Capital Acquisition Corporation MUDS Hycroft Mining gold & silver
Nebula Acquisition Corp. NEBU Open Lending automotive finance
Proficient Alpha Acquisition Corp. PAAC Lion Financial Group financial services
Pure Acquisition Corp. PACQ HighPeak Energy oil & gas
VectoIQ Acquisition Corp. VTIQ Nikola zero emissions trucks
Wealthbridge Acquisition Limited HHHH Scienjoy China streaming video

Although the SPACs are a way of getting an early investment in currently private companies, they do carry risk.

Happy investing!

Disclosure: Author didn’t own any of the above at the time the article was written.

How to Invest in Space Travel

by Fred Fuld III

Last month, I published an article called UFO Stocks. The report covered many of the companies that are involved in the satellite and space industry, such as Maxar Technologies (MAXR),  Viasat (VSAT), and EchoStar (SATS). I also mentioned the Procure Space ETF (UFO) which is a diversified way to play the space industry.

However, there is a new way to invest in space travel. How would you like to invest in Richard Branson’s Virgin Galactic? This is the company that will allow anyone (even you) to flying space, assuming you are willing to pay the fee of $200,000 to $250,000. The company already has a waiting list of 600 people.

The way to invest in Virgin Galactic is through a company called Social Capital Hedosophia (IPOA), which trades on the New York Stock Exchange. Social Capital Hedosophia will be involved in a merger and end up owning 49% of Galactic.

It will be interesting to see if this stock gets as high as the aircraft that will be sent into space.

Disclosure: Author owns IPOA.