If you’re looking for special purpose acquisition companies (SPACs) stocks to buy, you might want to step back and take a breath or two.
Consider this, the Canadian Broadcasting Corporation, known north of the 49th parallel as the CBC, has just published an article about SPACs.
In case you’re new to this planet, the CBC is a lot of things, but it’s not a business media dynamo. Sure, it has Dragons Den Canada, which spawned Kevin O’Leary (Mr.Wonderful) and Robert Herjavec on Shark Tank.
Interestingly, you won’t find any reference to O’Leary or Herjavec’s time on the Canadian show. It’s as if the CBC had nothing to do with their TV success. But I digress.
The reality is that when the CBC starts telling you what you need to know about the next hyped-up investment fad, you instinctively ought to know that SPACs are out of control.
Moreover, Marker recently published an article entitled, “The Beginning of the End of the SPAC Frenzy.”
According to CNBC, 370 SPACs were still looking for a target as of March 9. Marker also pointed out that 200 SPACs have raised more than $70 billion in dry powder so far in 2021. However, the publication reckons that SPACs are running out of targets.
I don’t see it that way.
According to the U.S. Small Business Administration (SBA), there were 30.7 million small businesses in America, accounting for 99.9% of the number of businesses in this country.
The problem isn’t there aren’t enough businesses to buy. The problem is there aren’t enough SPACs committed to taking the time to find a REAL business and not some pump-and-dump money loser.
Most of the SPACs to buy you read about in the business media are for the billion-dollar variety. But to go against the grain, here are 10 SPACs looking for targets that raised $200 million or less.
- G&P Acquisition Corp. (NYSE:GAPA.UN)
- PWP Forward Acquisition Corp. I (NASDAQ:FRWAU)
- SVF Investment Corp. 2 (NASDAQ:SVFB)
- Altimar Acquisition Corp. III (NYSE:ATMR.UN)
- Twin Ridge Capital Acquisition Corp. (NYSE:TRCA.UN)
- Goldenbridge Acquisition Limited (NASDAQ:GBRGU)
- Kensington Capital Acquisition Corp. II (NYSE:KCAC.UN)
- Isleworth Healthcare Acquisition Corp. (NASDAQ:ISLEU)
- B. Riley Principal 150 Merger Corp. (NASDAQ:BRPMU)
- SportsTek Acquisition Corp. (NASDAQ:SPTKU)
Now, let’s dive in and take a closer look at each one.
SPACs to Buy: G&P Acquisition Corp. (GAPA.UN)
The New York-based SPAC priced its units on March 10, 2021, selling 17.5 million at $10 per unit. The units give investors one Class A common share and one-half of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
The people behind the sponsor, G&P Sponsor LLC, include Brendan T. O’Donnell, the CEO of the SPAC. O’Donnell’s full-time job is CEO of Newport Craft, a rapidly growing craft brewer. The President of the SPAC is Nicholas Schorsch Jr., a Philadelphia real estate investor.
Word to the wise: Schorsch has had a past run-in with the Securities and Exchange Commission (SEC) over disputes about inflated fees charged by his real estate companies.
Why I like it: Food and beverage and hospitality, in general, are going to take off once the pandemic is behind us.
PWP Forward Acquisition Corp. I (FRWAU)
The SPAC priced its units on March 9, 2021, selling 20 million at $10 per unit. The units give investors one Class A common share and one-fifth of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
The people behind the sponsor, PWP Forward Sponsor LLC, include CEO Stacia Ryan, an investment banker with Perella Weinberg Partners (PWP), an independent, New York-based investment advisory firm, and Chairman Joseph Perella, the Perella in the company name.
Why I like it: The first reason is that it’s focused on finding a target company that a woman leads as part of PWP’s efforts to improve financing options for women-led businesses.
That brings me to my second point.
Stacia Ryan, the SPACs CEO, is a woman whose years of success in investment banking make her an ideal person to lead the search for an up-and-coming woman-led business.
According to a 2018 report from Boston Consulting, startups founded or co-founded by a woman deliver more than twice the amount of revenue per dollar invested — $0.78 to $0.31 — than men do.
Need I say more.
SPACs to Buy SVF Investment Corp. 2 (SVFB)
I tried to stay away from the so-called “superstar” SPACs by limiting the capital raised to $200 million. But that doesn’t seem to have worked with this particular SPAC.
SVFB priced its offering on March 8, 2021, selling 20 million at $10 per share. You’ll notice in the prospectus that there are no warrants in its offering. The underwriters opted to exercise their option to buy an additional three million shares. As a result, the SPAC raised a little over $217 million after fees.
The people behind the sponsor, SoftBank Investment Advisers, manage SoftBank Group’s (OTCMKTS:SFTBY) multi-billion-dollar Vision Funds. SVF is short for SoftBank Vision Fund.
Why I like it: The SPAC intends to focus on technology-enabled sectors such as artificial intelligence, robotics, cloud technology, fintech and many other areas that kept chugging along during the pandemic because of their innovation and technology bent.
And it doesn’t hurt to carry the SoftBank name when searching for targets.
Altimar Acquisition Corp. III (ATMR.UN)
The SPAC priced its units on March 3, 2021, selling 13.5 million at $10 per share. The units give investors one Class A common share and one-fourth of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
The people behind the sponsor, Altimar Sponsor III LLC, are affiliated with HPS Investment Partners LLC, a New York-based investment firm that provides investors with credit and longer-dated, less liquid investment opportunities.
The CEO and CFO of the SPAC are Tom Wasserman and Wendi Lai, respectively. Both are managing partners at HPS. The management team intends to focus on targets in the TMT (Technology, Media, and Telcom), Healthcare, Financial Services/Fintech and Consumer sectors. These are areas of strength for HPS.
Why I like it: Altimar III is the third SPAC for HPS. The first two raised $620 million in gross proceeds.
The only downside is that Altimar Acquisition Corp. (NYSE:ATAC), the first of its three SPACs, is currently embroiled in a fight between one of its merger partners — Dyal Capital Partners — and Sixth Street Partners. Dyal’s third fund holds a minority investment in Sixth Street.
With all of that in mind, though, you have to break a few eggs to make an omelet.
SPACs to Buy: Twin Ridge Capital Acquisition Corp. (TRCA.UN)
The SPAC priced its units on March 10, 2021, selling 20 million at $10 per unit. The units give investors one Class A common share and one-third of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
The people behind the sponsor, Twin Ridge Capital Sponsor LLC, include Chairman Dale Morrison, who, in addition to being a founding partner in Twin Ridge Capital Management, an investment firm focused on the food industry, Morrison’s also been the CEO of McCain Foods from 2004 and 2011 and Campbell Soup (NYSE:CPB) from 1997 to 2000.
Although Morrison has a food background, the SPAC plans a broader search for a target operating within the consumer and distribution-related industries.
Why I like it: The SPAC business seems to attract a lot of investor-types rather than operators. Morrison has spent most of his career growing businesses. Whoever Twin Ridge merges with you can be sure there will be growth in its future.
Goldenbridge Acquisition Limited (GBRGU)
The smallest of 10 SPACs to buy on my list, Goldenbridge, priced its units on March 1, 2021 — selling 5 million at $10 per unit. The units give investors one 0rdinary share, a redeemable warrant, and one right to receive one-tenth of a second share once a combination is completed.
Two warrants entitle investors to purchase an ordinary share at $11.50. A total of 10 rights entitles investors to receive a second ordinary share. Based on purchasing 10 units, assuming you exercised your warrants, you would end up with 16 shares for a total cost of $157.50 or $9.84 per share.
Cross Wealth Investment Holding Limited, owned by 63-year-old director Jining Li, is the SPAC sponsor. The CEO is Yongsheng Liu, the CEO of Wealthbridge Acquisition, another SPAC sponsored by Li until it merged with China-based Scienjoy Holding (NASDAQ:SJ) in May 2020.
Why I like it: It is focusing on innovative companies in artificial intelligence and other technology growth trends. It will also focus on companies who’ve grown revenues or earnings by 25% or more in each of the past two years.
It’s nice to know that they have a desire to combine with a potentially profitable business. Most SPACs could care less.
SPACs to Buy: Kensington Capital Acquisition Corp. II (KCAC.UN)
This SPACs sponsor, Kensington Capital Sponsor II, and the people behind it are probably the most well-known of the 10 SPACs to buy. Justin Mirro is the SPACs CEO, and his full-time job is as President of Kensington Capital Partners LLC.
Mirro’s first SPAC, Kensington Capital Acquisition Corp., merged with Bill Gates-backed QuantamScape (NYSE:QS) in November 2020. In turn, its shares trade at almost six times the SPAC’s original unit price.
KCAC.UN priced its units on Feb. 25, 2021, selling 20 million at $10 per unit. The units give investors one Class A common share and one-fourth of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
Like Mirro’s first SPAC, the second intends to focus its search for a target in the automotive and automotive-related sector. Mirro and his management team clearly understand the automotive sector. I expect it will find an equally appealing target.
Why I like it: In September 2020, I said that a $16 share price for QuantumScape would seem ridiculously low if it met its potential. Still early days, this could turn out to be one of the better SPACs of the entire decade.
Isleworth Healthcare Acquisition Corp. (ISLEU)
The only healthcare-focused SPAC on my list, Isleworth priced its units on Feb. 24, 2021, selling 18 million at $10 per unit. The units give investors one Class A common share and one-half of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
The SPAC has focused its sights on healthcare innovation. That means biopharmaceuticals and medical devices/technology companies primarily in North America.
The team behind the SPAC has a wide array of talents. Chairman Allen Weiss held multiple positions at Disney (NYSE:DIS) from 1994 to 2011. Meanwhile, CEO Robert Whitehead has founded or co-founded several biopharmaceuticals companies.
Why I like it: Healthcare is one of those sectors that’s unlikely to have a prolonged lull. That said, America is aging — and Isleworth can be a part of the solution. Plus, it’s got a solid group of directors with healthcare experience.
SPACs to Buy: B. Riley Principal 150 Merger Corp. (BRPMU)
The SPAC priced its units on Feb. 18, 2021, selling 15 million at $10 per unit. The units give investors one Class A common share and one-third of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
If you follow many stocks, you’re probably familiar with B. Riley Financial (NASDAQ:RILY), the Los Angeles-based financial services company. Its investment banking unit provides investment research on all kinds of stocks, including SPACs.
The CEO of BRPMU is Daniel Shribman, the Chief Investment Officer for B. Riley Financial and President of B. Riley Principal Investments LLC — all at the young age of 36. Additionally, Bryant Riley serves as Chairman of the SPAC and Chairman of the parent company.
Why I like it: The SPAC is focusing on businesses with an enterprise value of between $300 million and $1 billion. In other words, it’s not reaching for the moon. Thus, I’m sure there will be plenty of attractive candidates of this size of business.
SportsTek Acquisition Corp. (SPTKU)
The SPAC priced its units on Feb. 16, 2021, selling 15 million at $10 per unit. The units give investors one Class A common share and one-half of one redeemable warrant. A full warrant allows investors to exercise a second Class A common share at $11.50 at some point in the future.
I’m a sucker for sports-related investments. The people behind SportsTek have a significant amount of sports industry experience.
The SPAC has co-CEOs. Tavo Hellmund founded the U.S. Formula 1 race in Austin. He’s also a co-founder of the Mexican Grand Prix and has been involved in all kinds of motor racing-related endeavors. The other is Jeffrey Luhnow, the former General Manager of the Houston Astros.
Both have fascinating backgrounds. The third piece of the management team is Timothy Clark. He’s both the COO and CFO. His background is in middle-market private equity, with some sports industry experience thrown in for good measure.
Why I like it: The past year has been terrible for professional sports. However, I’m sure there are businesses that SportsTek can acquire that have been thinking about how best to ensure the industry doesn’t get hit quite so badly the next time fans can’t be in the stands.
Furthermore, if there’s a super resilient industry, I believe sport-related businesses would rank fairly high. Just ask Jerry Jones, the Dallas Cowboys owner, whether he likes working in the sports industry.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
