The Capitalist Revolution Begins Here
That ain’t workin’, that’s the way you do it; Money for nothin’ and your chicks for free
The headline above were it to actually occur would not surprise me one iota. What better way to monetize your avid following than forming a SPAC? What better way to take in a huge pile of money for doing practically nothing with minimal risk?
[Read more…] about Trump To Form SPAC Day One After Leaving OfficeIn my last post I wrote about the 20% dilution for average SPAC purchasers, and how that 20% is gifted to the sponsor. But in one of the two examples of cashing in that I shared it left open the question ‘What about John Henry, he’s not a sponsor, what did he get out of it?’
Quite simply, he got an excellent opportunity to begin cashing out. Was the SPAC purchase of part of his company done at a reasonable valuation? In this particular instance I have no idea, but overall I suspect that owners selling to SPAC’s are receiving very favorable prices and terms that would not be paid in traditional private markets or in an IPO. While I didn’t want to take the exhaustive amount of time needed to evaluate John Henry’s sale price, I knew that the main conflict of interest in SPAC’s – close a deal, any deal – would make rich hunting grounds for those who do have the time and incentive: short sellers.
[Read more…] about SPAC’S Suck Pt. IIAs the numbers have gone from a trickle to a stream to a flood, I’ve been watching the announcements of new SPAC formations the past year with a mixture of amusement and bewilderment. On the one hand the rationale behind why someone would want to give their money to someone else to invest blindly is baffling. On the other hand I fully comprehend why every sponsor of a SPAC is coming to market as soon as possible – it’s free money for them.
Because of the utter logic of the latter point – free money – I held off on writing about the reinvigoration of what I would characterize as a charade. But now that we seem to be reaching a crescendo, whereby every financier and celebrity is lending their name getting involved with creating a SPAC, I can no longer hold back. It would be easy to pick on Shaq as the catalyst for this writing, or Billy Beane or Paul Ryan, heck even Masayoshi Son’s SPAC announcement coming so quickly on the heels of his WeWork debacle. Yet what finally spurred me to put pen to paper was not the flood of new SPACs, but what I see as the beginning of the end for these noxious vehicles. Or maybe end-game is a better characterization. Because it’s not the upsurge of newly announced SPAC’s that’s so alarming as much as the cashing out, and the early signs of this are sprinkled sotto voce in the SPAC-mania headlines.
Det. Thorn: Something stinks here.
Hatcher: Look. You’ll sign this. And I’ll bury it.
Det. Thorn: Like hell you will. A member of the board of the Soylent Corporation was torn apart with a meat hook! You can’t sweep that carcass under the rug. Who bought you?
Hatcher: You’re bought as soon as they pay you a salary.
Det. Thorn: Yeah, well, who is “they?”
Yesterday the CEO’s of many major U.S. companies including those of Apple, J.P. Morgan, and Walmart issued a press release proclamation through a group called the Business Roundtable that public corporations should no longer prioritize only the interests of shareholders, even if that means that shareholders will receive fewer monetary benefits because of this change.
Putting aside the intrinsic reality that in order to run a successful corporation and ultimately maximize shareholder value these non-shareholder groups already must be given consideration, there’s a much more pressing question: Who are these shareholders?
[Read more…] about “The Shareholder Is People!”The biggest threat to financial markets in 2019 and beyond, is the dual-class voting structures gaining traction in the massive IPO’s coming to market and embodied by Lyft. It’s also the greatest threat to this nation.
If Lyft succeeds in pulling off this IPO as filed and with minimal impact to its share price, [Read more…] about The Biggest Threat to Financial Markets Right Now
