It's not about SPACs.
If successful the suit would probably require SPACs to be registered as investment funds.
There have been more than three hundred SPACs so far this year—about three every business day.
SPACs are here to stay."
That's nearly five SPACs per business day so far this year.
One more topic on our radar: SPACs (special purpose acquisition vehicles).
While SPACs have existed for years, the industry has seen a boost more recently.
SPACs have been caught in a harsh sell-off along with growth stocks as bond yields rise.
And media companies like Playboy and CuriosityStream have recently gone public through SPACs.
In the first four months of 2021 the supply of new SPACs has already outpaced all of 2020 combined.
"SPACs or no SPACs, in the world where capital is costless, startups will persist for far longer than they might otherwise."
SPACs typically sell common shares at $10 per unit, which is why exchange-listed SPACs that have yet to announce an acquisition trade very close to $10.
He admits that the market has become a little bit frothy as the number of SPACs has mushroomed while riskier and unprofitable companies have gone public through SPACs.
The investor has raised more than $1.1 billion for two SPACs this year, and three major companies — DraftKings, Velodyne, and Virgin Galactic — have gone public via SPACs in 2020.
The London-based fund, which has $1 billion of gross exposure to SPACs, recently told investors in a newsletter that SPACs have generated "awful returns" and it has ramped up short bets against SPACs.
While the surge in SPACs has not yet affected valuations in his sector, Stone said the perception of Perceptive in the eyes of the firm's hedge-fund, venture-capital, and credit-fund investors is too important for Stone's SPACs to operate recklessly.
Lebovitz believes that investor enthusiasm and risk-on sentiment, along with a market flush with liquidity , has created such an exuberance around SPACs that they have unintentionally undermined the unique attributes that made SPACs attractive in the first place.
He said that while the accounting change for warrants temporarily halted SPAC IPO issuance as SPACs restated their financials, such regulation is unlikely to "considerably or meaningfully" slow down the secular trend toward companies choosing to go public via SPACs.
With a strategy focused on pre-merger SPACs, the fund avoids some of SPACs biggest criticisms, such as over the long-term SPACs tend to perform worse than companies that have gone public through the traditional route, according to a report from Renaissance Capital.
But today, with so many SPACs trading at premiums, the alpha has been chased out and the returns have become more normalized, Ratner said, adding that he is taking a value-oriented approach to selecting SPACs and investing in undervalued companies that are mispriced because they went public via SPACs.
SPACs
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