by Travis Johnson, Stock Gumshoe | April 2, 2021 6:24 pm
This is premium content. To view this article (and to have full access to the rest of our articles), sign up. Already a member? Log in.
Source URL: https://www.stockgumshoe.com/2021/04/friday-file-cheaper-spacs-and-a-year-to-remember/
Copyright ©2024 Stock Gumshoe unless otherwise noted.
Great analysis as usual Travis! Thank you so much!
Great analysis. I agree with you that it is better to buy the sponsor than the SPAC. House always makes money. TD Ameritrade doesn’t have PSH.AS, is PSHZF the same?
Yes. Pershing Square Holdings is a PFIC, so be aware that there are tax complications. Basic info at https://en.m.wikipedia.org/wiki/Passive_foreign_investment_company
Travis, any updates on TTD? I sold a bit earlier at 925 and took my principal off the table. Now I am wondering if I should buy some back at a much lower price. I still have some shares.
The problem I see is seems like quite a bit of money was rotated out of the high flyers lately. No telling if this is temporary. Obviously the stock has gone through the roof last year. So really appreciate your take on this.
I am curious to. I would buy more, but TTD is the largest position in my portfolio, so that makes it tough. Their growth is unreal and they have a positive earnings per share. I am definatly going to let this one run for a few years.
I covered TTD in some detail here: https://www.stockgumshoe.com/2021/02/friday-file-new-spac-annual-review-pt-4-and-more/
Last time I checked, the level I look at where I could justify the valuation for a buy would be around $590.
On Hargreaves Lansdown platform in England the page for PSH (https://www.hl.co.uk/shares/shares-search-results/p/pershing-square-holdings-ltd-npvH) shows a charge by PSH of 11.68% for the past year, so PSH’s performance charges might explain the 25% discount.
Yes, they get roughly 1.5-2% management fee and I think now a 16% performance fee above the benchmark.
And, of course, investors dislike that; hence the large discount. We often see this in Britain: funds with performance fees – large discount; funds with no such fee and low charges – sometimes at a premium.
I think a discount is warranted, I just think 10% or so is reasonable, not the 25-40% it has sometimes been. I’ll buy it up to a 25% discount, and begin to sell it if that drops to 5-10% or goes back to a premium.
Sorry, newish investor question here — are you referring to discount to NAV?
Yes. Most closed-end funds trade at a discount to NAV and have unusually high fees and expenses (at least, relative to open-ended mutual funds), but the typical discount is more in the 5-10% range. Most funds report their NAV daily, Pershing Square reports theirs weekly.
Is SLACU only available to accredited investors currently?
I can’t imagine why it would be, it’s a listed SPAC, though sometimes the Units don’t appear in every system before they split (so SLAC, with the warrant removed, should begin trading today)
As I write this, the NASDAQ is up 158 points but the high multiple stocks in Travis ‘s portfolio (and mine) like SHOP, TTD, SFIX etc are all down. Any opinions as to this continuing?
Because they have pumped up to ridiculous valuations for the years leading upto mid 2020. They need to grow into the valuations a bit I think.
I own SFIX
“can’t shortchange those lifetime investors, after all”….Travis, I am one of those investors, and feel like have had the better end of that bargain 🙂
But the reason I was motivated to post my first comment here today is in just appreciation of your writing style and wit…So many times when I read something you’ve written I am amazed by how well it hits the mark, and with such grace.
While I have loved, and continue to love, getting your investment advice, it is these other “softer” fronts that I think make the return on investment with you extraordinary.
Thanks cubus! You made my day, I appreciate the kind words.
Haha . . . I had a mental image of you as a slender guy, but after reading this article, it has changed to an overweight guy, and for some unknown reason . . . with gray hair 🙂
I make it a priority to work out at the gym at least twice a week and replace fat with muscle.
If I were listed on a football team roster you’d think “run stuffing linebacker” … it’s just that the body mass seems to have been pulled gravitationally to my equator over the past year 🙂
Hopefully I’ll be back on track soon.
Speaking of SPACs, any interest in Accelerate Arbitrage Fund (ARB.TO)? I have been watching it but haven’t pulled the trigger yet.
New to me, why does it appeal to you?
SPAC Arbitrage is an investment strategy that seeks to acquire shares or units of a special purpose acquisition company (“SPAC”) at or below its net asset value (“NAV”) in order to generate a return through either:
an exit at a premium to NAV once the SPAC announces a business combination
an exit at NAV, being the IPO price plus accrued interest, through a redemption before the deal vote or through the liquidation of the SPAC
The investment fee seems “reasonable”. While I watch the SPACs that you prefer, there are many more than I can look at. And believe that it is easier for an institution to redeem the shares in case of a liquidation though I am not sure of that. It would be a small position for me.
accelerateshares.com/investment-solutions/arb-2/?mc_cid=0388f0531b&mc_eid=080ace7045
Both merger arbitrage and SPAC arbitrage are fairly reliable ways to, on average, make a return that I’d typically expect to be in the 5-10% neighborhood annually, sometimes a little more, and this fund does both so that’s somewhat appealing as a non-correlated strategy. Though with the crazy move in SPACs, it will be curious to see how the strategy does after the SPAC bubble and pop — the 25% or so move since inception is not sustainable, but I’ll have to look into it in more detail. There are quite a few arbitrage funds out there, mostly in institutions but some mutual funds as well, and that does typically put a little lid on the return (if everyone’s looking to make that easy 10% return, maybe that competition drives it down to an 8% return, etc.).
Thanks for the note, I do like the strategy in general. Not crazy about the expense ratio, but it’s a fairly active strategy and a small fund so it’s not a big surprise that it’s near 1%.
Thanks. I found this to be an interesting article: The lowdown on SPACs and the paper that’s the basis for the article
https://clsbluesky.law.columbia.edu/2021/03/11/the-lowdown-on-spacs/
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3775847