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  • Writer's pictureShinya Deguchi

Spacman is Baaaack

It was 2006, a very early day of my career when Fir Tree’s founder, Jeff Tennenbaum, gave us a “lecture” on SPAC. It was still a nascent market with very limited participants and Fir Tree was one of them. Jeff eventually connected us with EarlyBirdCapital, the only investment bank specialized in SPAC. We had a series of educational conversations on SPAC.

Jeff Tennenbaum is now running Titan Grove – it’s an interesting company that owns many impact businesses. He was a pioneer of ESG (before it was called ESG), too.

After the 2008 market debacle, SPAC lost popularity (again) until we saw a recovery in 2020. During the year, US-listed SPACs represented 53% of all US IPOs, according to Nasdaq and SPAC Alpha. In 2021, 79% of all US IPOs were SPAC. If you think it’s not a bubble, I don’t know what it is.

SPAC was a good investment for everyone. If you invest in the bottom 15% of SPAC, you still made money between Jan 1, 2019, to Jan 22, 2021 (3%). However, you want to pay a lot closer attention to the performance of the Sponsor. The average return of SPAC for Sponsor is 958% and the return of the bottom 15% was 178%. When you consider investing in SPAC, you should know if you are the predator or the game.

Market Movements

Small-cap continues to perform well. Value vs. growth argument is flipping. Chinese A-shares is now down for the year. We are living in a different world now… shall we call it Post-COVID?

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