If you like to invest in special purpose acquisition companies with a financial focus, Foley Trasimene Acquisition II (NYSE:BFT) should be right up your alley. BFT stock is moving up fast, but the greatest gains could be yet to come.
Foley Trasimene Acquisition II is an unwieldy name, but it acknowledges the leadership of Bill Foley. We’ll talk more about Foley but suffice it to say that he’s a financial maven and one heck of a dealmaker.
Does it make sense to buy a SPAC stock based on the track record of the shell company’s founder? That shouldn’t necessarily be the sole motivation to own a stock, I’ll admit.
But then, I did recommend buying Social Capital Hedosophia Holdings IV (NYSE:IPOD) stock mostly based on founder Chamath Palihapitiya’s reputation. So, maybe a similar logic can be applied to BFT stock. But first, let’s perform a checkup on the technical aspects of BFT.
A Closer Look at BFT Stock
For BFT stock, the initial public offering date was Aug. 19 but the share price didn’t immediately go to the moon. As often happens with SPAC stocks, the BFT share price stayed fairly close to $10 for a while.
However, BFT stock did achieve liftoff in early December. Specifically, this occurred starting on Dec. 7, when Foley Trasimene Acquisition II announced a merger with a fintech company which we will soon explore.
Quickly, the bulls charged ahead with BFT stock, pushing the share price up to a 52-week high of $19.57 on Jan. 21. Yet, that rocket ride couldn’t be sustained, as BFT chopped sideways during the following trading sessions.
BFT stock is now just under $17. Could the bulls simply be taking a breather in preparation for another leg up? It’s certainly possible, and perhaps BFT’s full value isn’t yet priced into the shares.
Pitching a Payments Powerhouse
Foley’s acquisition target for this particular SPAC is none other than leading global payments provider and processor Paysafe. As you might expect, the merger announcement made waves in the SPAC space and in the fintech community generally.
The merger deal is expected to close during 2021’s first half, and when that happens, the newly combined company will simply be called Paysafe. This company will be listed on the New York Stock Exchange under the ticker symbol PSFE.
Paysafe is a major player in fintech with a pro-forma enterprise value of around $9 billion. According to Foley, the company has processed nearly $100 million worth of payment volume.
We must admit, Foley’s a consummate pitchman. In his words, Paysafe “delivers a unique value proposition in large and high-growth markets, such as gaming and e-commerce, enabling the company to generate strong organic revenue growth and margin expansion.”
Getting to Know Foley
Foley’s pitch is impressive, as are Paysafe’s EBITDA margins of over 30%. Pound for pound, you’d be hard pressed to identify a stronger digital payments sector competitor than Paysafe.
But what about Foley himself? With BFT/PSFE stock, you should believe in both the jockey and the horse, so to speak.
Fortunately, Foley’s track record practically speaks for itself. You’ll get a fuller picture of Foley’s backstory via the value-packed articles penned by InvestorPlace contributors Will Ashworth and Vince Martin, but I’ll offer you the bullet points to whet your appetite:
- Foley is known to sports fans as the owner of the Las Vegas Knights NHL team.
- For all of you SPAC trackers out there, Foley Trasimene Acquisition II is Foley’s fourth SPAC (despite the “II” at the end of the name).
- Foley is quite familiar with multi-billion-dollar deals as his first SPAC was CF Corp. That company’s merger with Fidelity & Guaranty Life was valued at $2.24 billion.
- Fidelity National Financial (NYSE:FNF) (of which Foley serves in the position of chairman) bought Fidelity & Guaranty Life out for $3.25 billion. It’s been reported that Foley earned a roughly $138 million return, or 515%, on his investment in CF Corp.
- Foley raised $900 million for the original Foley Trasimene Acquisition (NYSE:WPF) in May of 2020. As of Feb. 21, that company hadn’t yet publicly announced a merger target.
The Bottom Line
So, should you buy BFT stock because you like Foley, or because you like Paysafe?
The answer is: both. And when the market finally prices in the true value of Paysafe (not to mention Foley’s undeniable track record) BFT stock should run much higher.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
