Investing in Blank Checks

Published on
April 12th, 2019
Duration
8 minutes

Investing in Blank Checks

Trade Ideas ·
Featuring John Jannarone

Published on: April 12th, 2019 • Duration: 8 minutes

John Jannarone, editor in chief of IPO Edge, highlights a unique & growing section of the IPO market - SPAC’s: Special Purpose Acquisition Companies. In this interview with Jake Merl, Jannarone explains how these blank-check companies work, discusses the current opportunity in Thunder Bridge Acquisition, and notes how to make the trade. Filmed on April 9, 2019.

Comments

Transcript

  • RP
    Ryan P.
    13 April 2019 @ 14:43
    Couple things to add that were missing : Key here is management teams. Most of the good deals get done by great teams. Be aware of this and research the people running the SPAC company. Retail investors don’t get “units” but purchase the common shares, warrants , and sometimes rights separately. Make sure you understand what your buying. Warrants shouldn’t trade above the fair value until a deal is announced. Deals typically have 24 mo to complete. If that doesn’t occur you typically get your money back once the SPAC dissolves. Common shares get their money back + interest on the original trust proceeds pro rata - as long as it’s before record date of the proxy vote. That’s why these tend to trade at discounts once they shares start to trade. Liquidity is limited so large positions need to be manager accordingly. I would spend more time evaluating targets and they space of operation before you chase the great idea. These are comprehensive capital structures so take the time to learn about how they work before you jump in.
  • PG
    Philippe G.
    12 April 2019 @ 15:49
    Interesting play. Thanks for the idea.