Software Acquisition Corp II has been flying under the radar for months but it looks like Otonomo Is its merger target. Otonomo is a automotive data company which sounds boring but is a game changer when you consider that most dating coming from cars is wasted or under utilized. See the attached pdf and podcast episode for DD. 

COVA is a new spac headed by Jun Hong Heng, the CEO of Cresent Cove a company that offers lending to growing tech companies.

 COVA is aiming to find a high growth merger target (fintech, software as service, etc.)  in the Southeast Asian market which is a HUGE opportunity considering the widespread use of mobile devices (for gaming & social media) and the rapidly growing fintech market. Southeast Asia is quite diverse ethnically, culturally, religiously, etc. but companies such as Sea Limited whose stock has gone from under $20 to over $300 in just under 3 years and  Go-Jek the one stop app for most things (that recently joined forces with Grab) demonstrate the potential for any acquisition target. 

This will probably be one of the most exciting SPACs of 2021. 

I came across 3 new spacs that just made their debut on the market the past few weeks. I'll list each and state why they're intriguing:

1. VOSO- potential adtech play which presents a huge market opportunity [see Roku and MGNI for examples]. Also lead by Jeffery Warshaw which is a pretty big name in the industry.

2. GMBT (Queen's Gambit)- potential play on green tech and its headed by a woman management team (girl power) which could grant it additional attention as a "socially responsible" investment.

3. EACP- play on social media, possibly streaming arena. Headed by the founder one of my favorite blogs Thrillist.  

If you were to ask me which one of these has the most potential right now I would say VOSO since ad tech is something that'll only get bigger as time goes on, but I would keep my eye on GMBT because they could make a splashy acquisition .

In 2020 we've learned that SPACs have the ability to offer some life changing financial gains.  I've engaged in some short and long term trades with these financial instruments, but about 90% of my trades are long term focused. This is a check list I use to determine the viability of a SPAC. Note that some of the points listed can't really be figured out until a merger announcement is made. But things like the SPAC management team or industry can be found in the S-1*.:

*Industry targets are often vague in S-1s but you can usually infer what it will be from the industries the management team has experience in or the hedge fund - private holding company they're associated with. 

1. Management team. Their connections and affiliations with other companies/ industries 

2. Does the company have a product or service that will "disrupt" their industry? Is it revolutionary like a a new type of battery tech, sports gambling platform, or just another generic electric car?

3. The viability of their acquisition target. Do they have an actual product? Are they already profitable ?

4. Market potential of acquired company. Is the market they in growing rapidly? 

5. Competitors. Who are the big players if any in their industry ?

In September of 2020 I purchased some TWNDU Units for $10.01 a few days after IPO and before any warrants or shares had separated for trading. I picked a pre-separation SPAC Unit and set out to go through the SPAC Unit separation process at Fidelity. This process is my first test of the Unit separation process and specifically the Fidelity process. Note: these Units were purchased in my HSA account and not my cash brokerage account since I trade my short-term plays in my HSA account to minimize the tax impacts of short-term moves.

Couple of things I wanted to learn and confirm:

1.      Confirm if Fidelity charges any fees for the separation,

2.      See how their process is setup and how much effort it takes to process this Corporate Action,

3.      See what the resulting basis allocation would be for the separated Units and Warrants,

a.      Tax basis considerations for yearend g/l reporting.

b.      Is there a holding period difference between separated Shares and Units?

The process: So a few months after the Warrants and Shares separated for trading I called the number on my Corporate Actions page (800-544-8666) to complete the process of separating my Units since I had already received the alert in my account from Fidelity. My rep tried to complete the process but when he went to submit he had a restriction on his side since the Units are in my HSA account that is apparently handled by a different group inside Fidelity. I was transferred to the HSA group rep who transferred me to another person. I told him what I was doing, and he confirmed my number for callback. First call total time 44 minutes including the initial wait which felt like the longest part. I Should mention that once I spoke to my first rep, there was very little to no hold time between associates. While waiting for a callback, I noticed the TWND Units in my account changed to their "numbers" and became unavailable for trading. The rep said that the Shares and Warrants were re-elected and should be available by Friday or Monday at the latest (3-5 days).

After 1 week, 1 hour of call time and 1 hour of waiting between calls, the separated Shares and Warrants are in my account and available for trading the following Tuesday.

1.      There were no fees to separate the Units.

2.      Process was somewhat painful from a timing and call perspective, but this may be primarily due to the use of my HSA account.

3.      My cost basis shows:

a.      Shares: $9.37

b.      Warrants: $1.28

c.      These amounts seem to be the relative market values on the day of split. 

4.      Both Shares & Warrants kept the original purchase date.

Important Note: be aware of the Share to Warrant ratio unique to each SPAC Unit and only buy in multiples that offer full Warrants upon separation unless you want to hold some Units after completion of the separation. The TWNDU contain 1 share and ½ warrant so I bought them in a round lot.

I will likely employ this approach for some Units in the future and will provide some updates as I go along. My next attempt will be to see if the process is identical for Units bought after they have already started separate trading of the Shares and Units.

TL;DR – Fidelity lets you split Units between Shares and Warrants for no cost if you call to complete your Corporate Action. This was done with a non-separated Unit bought pre-separation of Shares and Warrants. The holding period was the original Unit purchase date and the resulting cost basis is the relative market prices at separation.

I was looking around on The SpacCentral website this morning and came across SAQN. This SPAC is merging with the streaming service CuriosityStream which seems to be a big deal in the documentary space. The deal has already gone through but the price of 9.99 suggests that there isn't a lot of hype around this one.....BUT it could be a big winner going forward. 

What are SPAC Warrants?
SPAC Warrants are basically contracts that allow you to redeem them to gain a SPAC equity share. This typically is a 1:1 exchange. A merger must be finalized for some one to redeem the warrants. If a merger fails to happen, the warrants can be worthless.

Why are they so much cheaper compared to the equity?
When redeeming a warrant, you must pay a strike price per warrant. The strike price is typically around $11.
So let's take SHLL for example. 

Are warrants tradeable like regular stocks?
Yes, warrants trade just like regular stocks so you do not have to redeem them. You can simple buy and sell them like regular equities. Unfortunately, they are not currently available on Robinhood. 

Ask any additional questions you have in the comments below 😀

I came across Reinvent Technologies ( RPU ). This evening. It is a SPAC lead by Reid Hoffman and Mark Pincus targeting "technology business to innovate and achieve entrepreneurship at scale ". This leadership team and the SPAC have connections to a Greylock a private VC/Investment firm in Silicon Valley. This relationship is intriguing because if you view Greylock's website and check out firms that haven't gone public or been sold this leads to some potentially interesting targets including: Airbnb, Bountyjobs, Discord, NextDoor, Coinbase, and Wealthfront. Its entirely possible that none of these firms in Greylock's portfolio are the eventual target, but considering the management team I am excited!!

HCAC / HCACW

FEAC & FEAC+ (Warrants)

SPAQ - currently 10.40 / SPAQ.WS currently 0.93

Evening all. I've spent the past few weeks researching the IPOB.B & IPOB.C SPACs. I have no idea what companies these will be yet...but the fact that Chamath Palihapitiya & Ian Osbourne are partnering on these offer me some reassurance on their potential. This is especially true for Palihapitiya because he is a former Facebook executive with significant social capital in the tech space. Warrants for both recently started trading but note in the SEC filings that it is possible that the SPACs could compete for potential acquisition targets.