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Ronchong

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  1. Could be due to GameStop? It's about 6-7% of the ETF.
  2. Completely agree! But Wood is no chump either in the competition for the prize. I've just seen a video of her where she uses the treasury yield as a discount rate for equity. Seriously? There's no risk premium anymore? Either she's selling to idiots or thinks we're all idiots. What's even more amazing is that the video was monitored by someone from her compliance team. I do not have a morning wood for Cathie wood but I recall this is also how Buffett thinks about DCF/value as well. Got to dig out that interview/letter. Buffett discounts by the treasury yield and adjusts for the equity risk premium through his margin of safety. E.g. riskier stocks would have to trade at 50% below his calculated value but he doesn't discount the risk at the DCF stage. Not quite sure what advantages this has as opposed to discounting for the risk at the DCF stage.
  3. I get the original SPAC trade because that was a market where there was pretty much no opportunities. But the SPAC risk/reward have changed these few days,.I would say that you are lucky to even get a 15% announcement pop these days. No SPAC I know of got above $11.5 on the announcement so you are risking 5% for max 15% gain. That doesn't seem like a good trade to me. If the market ever get cheap enough, you can be pretty certain that SPACs would get sold off below their NAV. All this while, you have to liquidate your SPACs at a discount to switch over to whatever you want. Why lose 5% when you can lose none?
  4. @shamelesscloner I recall Greg mentioning that it was high 8s/low 9s in the other thread. I got out of most of my SPACs since the risk/reward is no longer attractive. The whole idea of investing in SPACs is so that (i) You can have a quasi cash instrument with upside optionality to park your cash when there is nothing cheap to invest in (ii) You have the ability to switch it out at a small gain/close to no loss and pick up quality businesses on the cheap when the market reverse. Why is anyone investing in SPACs now when your view is that there would be bargains down the road?
  5. On AVAN, I think you would find that Citadel owns a sizable position in most of the SPACs. This is due to their role as a market maker and not them investing out of merits. On VYGG, I put them taking Reddit public at 1%. There is a huge conflict of interest there.
  6. Well said @shamelesscloner. 8) @Ronchong - yeah, your approach may work fine. I am a bit concerned that we are getting to the late innings of the SPAC game and that there might be a reckoning at some point. I may even pull out from the "can't lose" strategy of buying at 1-2% over $10. It's possible though that I'm early in my skepticism. Chamath vehicles are clearly popular and attractive at the right price. Anyway, I've done SPCE warrants, VVNT warrants, NKLA warrants, IPOB, IPOC warrants. Sold all of those at huge % gains (not huge absolute sums, since I don't have to buy big and hodl). Still have a bunch of small warrant positions in various "interesting" SPACs, most at double/triple digit % gains. I just don't think it's as attractive SPACe ;D as it has been. Peace and Thanks shamelesscloner for the reminder. You said in 2 sentences what I said in 2 paragraphs. I have set myself a ceiling of 11 so that is something I'm very firm about. I too think that there would be a day when the SPAC mania ends and everyday we get closer. This is why I think that the time in the SPAC market is very important, the lesser it is the better it is. Optimising for FOMO lets me get out at an earlier time, a different kind of downside protection if you were to ask me.
  7. Sepearate question, how is everyone here categorising their SPACs in their portfolio? Does it form part of your equity allocation or do you have a separate weightage for it?
  8. The problem I have with noname SPACs is that they stay noname for a long time. CCAC was trading around 10.4 2 months ago and it has gone nowhere dince. It got up to 11 ish today but it was trading at 10.5 yesterday (Considered long in the SPAC land). I know I'm deviating from the original value based thesis, which is to buy into SPACs close to NAV and wait for the deal announcement pop but there is another play here if you want to improve your returns but it also increases your risks a little. If you were to break down the behaviour of a SPAC, it is simply a function of: (i) how fast it is likely to merge and (ii) how attractive the target is. Like what Greg has said, SPACs have embedded time value and actually increases in value as the deadline approaches since the chances for a deal becomes higher. Branded SPACs come out of the gate at a higher price because of higher perceived (ii) but increases in a lot value faster because their perceived (i) is a lot shorter. This is aided by the hype that their holders (Typical robinhood, Reddit, stocktwits people) would build around these SPACs with their speculations and rumours. While my CCAC has gone up by 3-4%, QELL (a slightly more branded SPAC) that I had bought for 10.8 at about the same time has gone up to 13-14. IPOD and IPOF are both going for 15, 16 when they were 10, 12 two months ago. Heck, if I were to sell QELL today, it would give me an even better return that most of the noname deal-announced SPACs that I had. The good thing is I didn't even have to stick around and wait for the deal announcement if I don't want to. Ironically, just like investment, sometimes it pays to pay a little more for "quality". If you can find a branded SPAC that can goes for 10% premium or less, I would say go for it.
  9. Its playing out like how you envisioned it to be! The pre-announcement SPACs start to trade at their expected value post-announcement. It's very hard to buy into promising pre-announcement SPACs under $11 now, even the unknown ones starts from $10.5. Chamath's IPOD is one of the most ridiculous SPAC that is currently on the market right now, trading close to 80% above cash value! This seems like a much profitable play than waiting for the SPAC's announcement. 1. Buy into promising SPACs at IPO 2. Wait for Robinhood gang to pile in 3. ??? 4. Profit I meant at unit launch! Sorry for the confusion, edited my post to make it clearer
  10. Its playing out like how you envisioned it to be! The pre-announcement SPACs start to trade at their expected value post-announcement. It's very hard to buy into promising pre-announcement SPACs under $11 now, even the unknown ones starts from $10.5. Chamath's IPOD is one of the most ridiculous SPAC that is currently on the market right now, trading close to 80% above cash value! There could be another play here whereby one buys into the next IPOX, IPOY, IPOZ, AJAX, DGNR at unit launch and wait for the speculative robinhoog gang to recognise the "value" of the team and drive the price up. Much better IRR! 1. Buy into promising SPACs at IPO 2. Wait for Robinhood gang to pile in 3. ??? 4. Profit
  11. Faster than I expected. The third spac ETF to be launched https://www.wsj.com/articles/third-spac-etf-launch-taps-into-blank-check-company-boom-11611225000?st=tqancnjk828lams&reflink=article_email_share
  12. 57% in a day, the party continues. I was speculating on the SOFI merger but went with IPOF instead thinking IPOE would be too small, damn. I think Chamath still hasnt close on his IPOD yet and there's a decent change either IPOD/F would close in the next few months given his tweets.
  13. Yes, I have also come to realise that 5% premium is a worthy price to pay for SPACs in today's market even tho I try to aim for 3%. If you were talking bout SPACs pre 2020, I probably wouldn't touch them at 10.5 but the return profile of SPACs has changed so much such that a 5% premium is justifiable. Spactrack calculates the YTD returns of all SPACs that has completed merger in 2020, and that return came up to be 62%. Of course, you can always say this is post merger, which comes with a different risk profile, but my own calculations for SPACs post LOI, pre merger yields return in the 60's as well. Since SPACs have a downside protection at $10, you can use margin to juice the return up to 93% just by putting a 30% leverage on them or even higher if you are aggressive. While you may say that the return is contingent on one picking all the SPACs that are due to merge in that year but a case can also be made that one is able to boost your return even further just by picking SPACs that are close to LOI, merger. I only started looking into SPACs in Sep and already 4 out of my 8 picks have merged/announced LOI (tho 2 of them are a little underwhelming) so it's really not that hard when even an idiot like me can do it. Of course, this is all dependent on the continuation of the SPAC maniac but as far as low risk investments go, I really find it difficult to put my money anywhere else other than SPACs atm
  14. I probably should, when I find out how to change the topic. I'm pretty much using SPACs as a form of cash alternative as well, I have about 50-60% of my portfolio spread over a basket of SPACs. Including SPACs, I'm about 100% invested, this leaves me around 20-30% of margin conservatively, backed against my SPACs, to add to my other positions if the market goes down. Thiel's SPAC is a sign of the beginning of the end, 60% above cash value for a company that may end up going the IPO route is madness. I think you have laid out the end game of the SPACs extremely well. Let me start, a couple of the SPACs near NAV that I have on my list are: XPOA CCAC FUSE AVAN
  15. Got it, didn't know that the science/biotech is another hot sector so I presume the play here is just on the targeted sector? Now, I don't disagree with your thesis since I'm in the same play as you but I have been thinking about the opportunity cost of SPACs lately. The new SPAC ETF that came out has a AUM of 2B against a total SPAC trust size of approx. 88B so it makes sense that the new SPAC range of 10.5 - 10.6 is also about 1 - 2% higher than the old range of 10.3 - 10.4. Now, I doubt that the market is going to stop at 2 SPAC ETFs seeing how things are going right now so the 10.5 -10.6 range is going to become 10.7 - 10.8 and then 10.8 - 10.9, so on and so fro as more and more SPAC ETFs come online. While this creates an opportunity to front-run the upcoming ETFs but the days of the asymmetrical risk/reward appears to be ending soon. At some point of time, it would no longer make sense to hold recent IPO SPACs at $11 or more. The Social Capital SPACs are in another class of their own but they present another play on it's own. There is this post by gfc in the "what are you buying" thread and the thesis is roughly similar. The plan here would to be to buy into SPACs with best-in-class management and wait for the RH crowd to become "aware" of the SPAC. Case in point. One unit of AJAX could be bought below 10 when it first IPO-ed and yesterday it just closed at 12.50 without any news. This way, u get to clip your 10 - 20% without even having to wait for the deal announcements!
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