SPACs: Special Purpose Acquisition Companies

On this week’s episode of the Wiser Roundtable podcast, the team discusses a craze that has taken Wall Street by storm recently. SPACs are special purpose acquisition companies, essentially shell companies that raise money from investors through stock-market listings.

Listen on Apple Podcasts or watch on YouTube:

SUMMARY:

SPACs are the topic of today’s podcast. SPACs are special purpose acquisition companies, essentially a shell company that raises money from investors through stock-market listings. They are also known as a “blank check” company. These SPACs are shell companies that have no assets other than cash from investors.

According to the U.S. Securities and Exchange Commission (SEC), a SPAC is created specifically to pool funds in order to finance a merger or acquisition opportunity within a set timeframe. SPACs raised a record $83 billion in 2020, a period sometimes referred to as the “blank check boom.”

Because a SPAC is registered with the SEC and a publicly traded company, the general public can buy its shares before the merger or acquisition takes place. For this reason, they’ve been referred to as the ‘poor man’s private equity funds.’

There are also SPAC index funds for retail investors to choose from. The team discusses this as an investment option.

Finally, the team has a special bonus round about NFTs (non-fungible tokens). An NFT is a new type of digital asset. Ownership is recorded on a blockchain — a digital ledger similar to the networks that underpin bitcoin and other cryptocurrencies. Each NFT is unique and can’t be duplicated.

TIMESTAMPS:

0:00 Introduction

1:58 What are SPACs?

4:50 Who manages them?

6:00 What is de-SPACing?

10:20 Where is the money coming from?

13:30 What does the investor receive?

14:30 ETFs

18:30 Not all interests are equally rewarded

21:20 NFTs

LINKS:

Learn more about Casey Smith and connect with him on Twitter.

Learn more about Brad Lyons.

Learn more about Matthews Barnett.

CONNECT:

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Learn more about A Wiser Retirement podcast and access previous episodes.

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