Launching SPAC IPO Advisory

A new frontier for enterprising IPO investors

Back in 2017 a very smart guy named Chamath Palihapitiya did a watershed IPO called Social Capital Hedosophia (IPOA) that few people paid attention to. It was a so-called “SPAC” which stands for Special Purpose Acquisition Company. Basically these deals raise a pile of money which sits there while the management works on buying something that results in a new public company with an operating business.

Then in August 2019 his SPAC announced the merger with Virgin Galactic (SPCE) and all of a sudden people (including us) really started to pay attention. The shares gained a huge retail following and sell-side coverage from banks like Morgan Stanley. Not only did investors do very well they had ways to leverage their investment with long-term warrants (since been redeemed).

I have never had a larger percentage return than I did on this particular IPO investment. I’m not sure it will be beaten but I believe that there is far more opportunity to find these than in the “regular way” IPO markets.

Just this week Social Capital priced another SPAC, Social Capital Hedosophia III (IPOC) with less generous terms but one that we will be watching closely.

So we are launching a new sister site called SPAC IPO Advisory that will be focused on covering these deals as they transition from SPAC status to operating companies. (IPO Candy will not only continue but is receiving some needed upgrades during this market pause. You’ll hear more about those soon.)

Generally speaking most of these companies lack any coverage at all and most investors are not paying close attention to them.

One that has captured some attention is happening today by the name of DraftKings. The SPAC is called Diamond Eagle (DEAC) but after shareholder approval they will re-emerge as a new public company.

If you want to continue to learn more about this area please sign up at the site. There is a free subscription that will be good for much of what we publish for a while. And you can read more about the DraftKings deal too.

Our goals for this site are to 1) allow people to learn a lot about this rather obscure but large and growing market and 2) make above-average returns by exploiting opportunities there.

I also hope to create some real community there over time so that like-minded investors can engage in real time.

Lots more content will be posted each week and you’ll receive updates by email. You can start with our write-up of DraftKings Deal to sign up and go from there.