Big SPAC deals don’t need big SPACs | Hacker News Reader

Big SPAC deals don’t need big SPACs

bloomberg.com

50 pointsfeross26 comments

I am still super long PSTH. It's the biggest SPAC ever led by a reputable value investor. The target will be huge (Stripe, Starlink, etc.)

Ackman is an activist investor not a value investor. Ackman already said Stripe declined his approach.

An activist investor is a kind of value investor. "These assets are worth more than the market says - the discount is bad management. Let's buy the assets cheap (good value) and change the people who, as owners, we pay to manage those assets."

The idea that such an approach is anything but value and anything but completely normal and somehow rebellious and untrustworthy is quite weird and speaks to some kind of capture of highly paid management position by some kind of group of people. (I really hesitate to use the word "class" because these people might be a temporary alliance including the born poor and status challenged - the marxist "born to it" doesn't help the analysis much at all. Think the cool, sports jock table at high school).

> An activist investor is a kind of value investor. "These assets are worth more than the market says - [...]

Isn't any investor who's not just buying an index fund a value investor by that broad definition?

(Even shortsellers just say: this stuff is worth less than the market says.)

As opposed speculator. "It's going up, i just know it." Or market makers, or technical analysts, or reading tea leaves...etc

Value investor suggests you have valued the assets and have reason for thinking they are underpriced. Shareholders own the company's assets. Managers are their employees and are not owned any more than any employees or indeed humans are owned.

Ackman is both. He is an activist in some of his plays, however, as can be seen through his publicly traded fund $PSH, most of his investments are long-term value investments which is also the sentiment echoed in his investor letters/presentations.

However, to the point of his SPAC vehicle - $PSTH, he has already stated in some interviews that he is not always looking for activist plays, and that $PSTH does not need to be one.

is there any reason to think starlink is even a possibility? i dont know much about all this but browsing reddit a few weeks ago that seemed like the meme possibility, in the same way that GME was going to go to $10000 a share.

There is no reason to think Starlink is a possibility. It is unfounded speculation being propagated by various social media communities.

There is not a single conclusive link between any SPAC and Starlink. All that exists is speculation, mainly (weakly) hinging on Elon's personality.

What's reputable about value investors when they haven't had worthwhile returns in at least 10 years?

Reputable companies don’t need SPACs. I’d guess there is close to zero chance of any SPAC landing a high quality company like stripe, Starlink etc...

There’s a good number of reputable top of the industry companies who went the SPAC route. Off the top of my head: United Wholesale Mortgage, DraftKings, Desktop Metal, ChargePoint

Or lucid

Lucid isn’t in the same class as stripe or Starlink. It hasn’t sold a single car let alone turned a profit. That is solid SPAC territory

Maybe, except i think you can say at least their team is pretty solid.

You are generalizing too ambitiously. It is true that (for the most part) reputable companies do not need SPACs. However, that is not the same as saying there is a close-to-zero chance for a SPAC to land a high quality company.

I have numerous friends in IB who specialize in this, and I have been told that $PSTH has a high chance of landing a 'quality' target. The scale of $PSTH is huge ($4 billion guaranteed capital + $1 billion-committed capital from $PSH which can be extended for a further $2 billion). This is $5bn-$7bn guaranteed capital. In fact, this is one of the biggest IPOs on the NYSE (IPO for the vehicle Pershing Square Tontine Holdings). As Ackman has said numerous times in interviews, many companies that are planning to go public do not like uncertainity. This is a way to avoid that. Not to mention the fact that in late-2020 Ackman confirmed he is launching PSTH2 which appears to have the exact same structure; high amounts of guaranteed capital, low dilution & fees.

Of course, "high quality companies" is a subjective term, however, I have no doubt that any company obtaining $5 billion after the reverse-merger will be a company well-established in thier respective field and can be argued as being "high quality". For the record, I do believe there is a close to zero chance of $PSTH reverse merging with Stripe or Starlink. I think they were founded on pure speculation by various other social media communities.

Elon already said Starlink is not going public for a while because it doesn't have the cash flow yet. Ackman said on BLOOMBERG TV that Stripe & Airbnb said they were not interested in using his SPAC. Patrick and John Collison have both been very anti going public and so I doubt they will have a change of heart. They also have voting control of the company.

The only real possibility is Bloomberg LP, although Bloomberg had denied the rumors.

It's also funny that everybody seems to forget about Valeant and Herbalife...

"The only real possibility is Bloomberg LP, although Bloomberg had denied the rumors"

And how did you come to this conclusion? There are many, many private companies that fit the criteria outlined in the S1.

"It's also funny that everybody seems to forget about Valeant and Herbalife... "

I have not met a single person who does not think of those events when discussing about Ackman. In fact, during his COVID-19 short & CNBC interview, there was no shortage of discussion about Valeant and Herbalife on financial twitter/Reddit/news comments.

TLDR: You need PIPE investors. Though with the recent correction, its harder to get, so it seems SPACs are trying to find companies they can merge w/o the need for PIPE to fill the rest.

Lucid Motors at one point was valued at 70b without a single car on the road. And although Churchhill Capital 4 raised 1b, $24 billion was filled by PIPE investors iirc.

What are PIPE investors? Do they get favourable terms?

Private investment in public equity. Generally, yes, but it's negotiated arm's length yet opaque; in addition there's various consideration to the legality/optics/consequences of selling a (large) stake at a (material) discount to current market spot rates.

As the article says, that's reminiscent of how bad old IPO allocations work.

I think it is important to note that PIPE investors will always purchase SPACs at NAV (usually $10) with only very rare exceptions. NAV is where most of the SPACs are currently trading due to the recent pullback. Therefore, it is only more favourable when the SPAC is trading above NAV, and this is extremely uncommon [1].

[1] - https://spactrack.net/activespacs/ (filter by price and see how many are trading above $10 and below $10).

That is why it is especially disgusting when fake populist SPAC sponsors (looking at you Chamath) pretend to be on the side of retail as they give handouts to their Wall Street lords.

Registration-walled and complains if you open it in private mode (how?)

Usually easiest to drop some localStorage/cookie on another subdomain or domain you control then check if it exists

By default in Firefox, indexedDB is disabled in private browsing mode (dom.indexedDB.privateBrowsing.enabled=false in about:flags), so you can detect it with something like

  var db = indexedDB.open("test");
  db.onerror = () => console.log('private browsing');
  db.onsuccess = () => console.log('not private browsing');

Based on Bugzilla, it seems like currently the backing mechanism for implementing indexedDB will write origin names to disk which is not something they want Private Browsing to do. See this older bug https://bugzilla.mozilla.org/show_bug.cgi?id=781982 and this newer one https://bugzilla.mozilla.org/show_bug.cgi?id=1639542

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