SPACs, also known as blank check companies, have become extremely popular on markets. But the trendy alternative to IPOs has had a bumpy last few months. The newfound popularity has made for increased competition, disillusionment among retail investors and a generous amount of half-assing on part of teams and SPAC boards with regards to their search. All this bad press has drawn skepticism around this valid means for bringing companies to market.
A healthy amount of skepticism is welcome, as with anything. However, SPACs have always been basically gambling. Except in this case, the gambling is not blind. A SPAC’s weight is measured in its team, board, resources and connections and their likelihood to entice a merger and find success is often measured in that weight.
For that reason, we want to focus on the top four pre-deal SPACs to watch out for in the second quarter of 2021:
1. Pershing Square Tontine Holdings Ltd ($PSTH)
Billionaire hedge fund manager Bill Ackman is the star behind Pershing Square Tontine Holdings, a SPAC created by Ackman’s Pershing Square Capital Management firm. When $PSTH went public in July 2020, it became the biggest SPAC in the history of markets, raising $4 billion in its IPO. That’s a pretty hefty amount of cash, which leaves a lot to the imagination as to what kind of company Ackman and his squad will take a stake in.
$PSTH has become a fast meme in finance communities on Reddit, including r/PSTH. The subreddit, which flexes over 11,000 members as of March 28, is filled with memes, speculation and content solely about the mega-SPAC. Retail speculators on the subreddit have tossed out names such as Stripe, SpaceX’s Starlink, WeWork, Subway and FanDuel. But that’s all digital banter. We’re still anxiously awaiting the day when $PSTH has announced its target — and it’s likely to still catch us by surprise.
2. FTAC Hera Acquisition Corp ($HERAU)
If you’ve been in the SPAC world for a while, you’ve no doubt heard of Chamath Palihapitiya. But have you heard of Betsy Cohen? Cohen is an entrepreneur and financier with 50 years of experience in banking, real estate and investing. She has become one of the biggest SPAC managers you don’t know.
In 1999, Cohen founded one of the first virtual banks for small and mid-sized businesses: The Bancorp, Inc. She led the company until 2014, when she stepped down to start her first SPAC, FinTech Acquisition Corp, which acquired CardConnect. Since then, the 79-year-old has started eight more SPACs which have acquired fintech players such as Payoneer and eToro. The rest are still in search of an acquisition target. We’re inclined to say that Cohen’s new $851 million SPAC, FTAC Hera Acquisition Corp, has all the ingredients to be a successful one, especially given Cohen’s track record. $HERAU, like its former funds, is expected to seek a fintech acquisition.
3. Virgin Group Acquisition Corp. II ($VGII)
Richard Branson’s Virgin Group has started an airline, space tourism company and telecom giant. Now, they’ve started two SPACs. Virgin’s first SPAC recently announced their definitive agreement with 23andMe, the consumer DNA-testing company. The high-profile of 23andMe and its new-found $3.5 billion valuation showed that Branson and team mean business.
They’re back for round two with the very imaginatively named Virgin Group Acquisition Corp. II. $VGII has raised $330 million to seek out and acquire a company that is a value-add for Virgin Group. Given Virgin Group’s far-reaching interests, this could mean acquiring a music, health, fintech, travel, telecom or energy company. Members of the SPAC’s team include Branson, Virgin Group CEO Josh Bayliss, Virgin Group CIO Evan Lovell and three other board members who have taken up residency on the boards of publicly traded companies.
Overall, this is one of those SPACs that could pan out to be anything.
4. Social Leverage Acquisition ($SLAC.U)
Social Leverage is one of the top 10 performing early-stage “micro VCs” in the world of fintech, technology and consumer products, according to Pitchbook. The only problem is that most working-class folks can’t get in on Social Leverage’s private fund, which has invested in companies like Robinhood, ChartIQ, Alpaca, Koyfin and Kustomer.
The good news is that investors can get in on their new SPAC: Social Leverage Acquisition. The SPAC raised $300 million in its IPO at $10.00 per unit. It will be led by the Stocktwits & Social Leverage CEO Howard Lindzon, Axos Bank chairman Paul Grinberg and Douglas Horlick. Given the track record of the VC and Lindzon, whom we are proud to call a Bullish partner, this SPAC deserves distinction.