Pershing Square Tontine Pops as It Hints at Upcoming Deal

After a quiet period, Pershing Square Tontine (NYSE:PSTH) stock sprang back to life. On Wednesday, PSTH stock enjoyed its heaviest single-day trading volume in months. The surge in trading interest came as shares leapt more than 7% to reclaim the $24 mark.

PSTH stock A photo of wooden blocks that say SPAC on a folded newspaper.
Source: Dmitry Demidovich/ShutterStock.com

Pershing Square Tontine, you’ll recall, is superstar investor Bill Ackman’s entry to the special purpose acquisition company (SPAC) arena. PSTH stock came public last year amid a great deal of fanfare. Shares rallied more than 50%, at one point topping $30. Don’t forget that unlike most SPACs which debut at $10, Tontine came out at $20. In any case, shares had fallen nearly back to that $20 level in recent days as the historic SPAC bust drags on.

That changed following an Ackman public event. On Wednesday, he spoke at a Wall Street Journal summit and detailed his thinking on various Pershing Square investments in things such as Domino’s Pizza (NYSE:DPZ) and Starbucks (NASDAQ:SBUX). During that interview, he also offered some subtle clues about how things are shaping up for his Pershing Square Tontine SPAC.

Ackman was clear that he didn’t want to give a precise timeline for a deal, nor did he want to raise expectations too much. However, what he did say was enough to get PSTH stock moving. Here’s why.

Ackman Drops Some Hints

First off, Ackman made it clear that he’s been focused intensely on one appealing target. “We’ve been working on a transaction since early November. Same transaction. Lot of complexity. I think we’re either going to get a transaction done in weeks, or we’ll be on to the next one. But obviously it was sufficiently attractive and interesting, it was worth devoting six months of our energy to,” Ackman said.

There was also another hint. The interviewer mentioned that Ackman had said that the SPAC might be looking for a late-stage mature technology unicorn. That would be a venture-capital based tech firm with a valuation already in the billions. However, at this point Ackman stepped in and said that he wasn’t just looking at unicorns, but also “super high-quality durable growth companies.”

While Ackman is obviously being coy, that might just tip his hand to a degree. If Ackman were looking at a large tech company, it probably wouldn’t be such a complicated deal that it would take six months to close. Rather, you’re more likely to find that sort of situation in some business has been around a long time and has more subsidiaries, legacy businesses, and other such intricacies.

What Might Ackman Buy?

The above hints were the extent of the clues Ackman gave. So, there’s not really enough to come to any firm conclusions. Still, the complexity of the deal involved – along with it seemingly not being a unicorn – hint toward a large legacy business. It’s long been rumored that Ackman was interested in buying media giant Bloomberg and traders are talking up that idea again.

There’s also the restaurant angle. It’s no secret that Ackman is fascinated with the restaurant industry lately. Thus, could he take a pass at a huge private restaurant chain such as Subway or Chick-Fil-A? Subway in particular could use an activist investor as it has seen its franchisee relationships sour and many stores close down. And while a tech unicorn seems less likely, perhaps Ackman still would be in the market for a dominant outfit such as Stripe. Time will tell.

PSTH Stock Verdict

Bill Ackman doesn’t want traders making a big deal about PSTH stock right now. In fact, he started off his recent video appearance by saying: “We don’t want people speculating and buying short-dated options on our SPAC.”

Regardless of what Ackman may wish, many traders are going to precisely do that. Because, at the end of the day, Ackman is a great investor and he’s truly had the hot hand lately. The clues he gave on the upcoming PSTH stock deal only added to the anticipation. If he’s spent six months on this thing, it must be worth the wait. And the fact that a deal could be coming in just a few weeks is sure to get folks’ attention.

Ackman may not want you to buy his stock until after the deal is announced. But you could hardly fault people for taking a position here. After the big rout in SPACs, good opportunities have developed. This looks like one of those that could make investors happy with the SPAC space again.

To be clear, until Ackman actually announces the deal, this is still an uncertain situation. However, the odds are looking increasingly good for PSTH stock.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.


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