It was almost exactly a month ago that I last checked in on Pershing Square Tontine Holdings (NYSE:PSTH) stock.
When it showed up on my list for the week, the first thing I looked for is the only thing that matters. Is there white smoke coming out of Bill Ackman’s metaphorical chimney? Nope. And without a target identified, PSTH stock looks a little ho-hum right now.
Investors are still left betting on Ackman’s business acumen. But as many of my InvestorPlace colleagues have noted, the longer this drags out, the more likely it is that Ackman will be unsuccessful in identifying the “mature unicorn” that he’s looking for.
This is creating a barroom debate. You know like Michael Jordan or LeBron James? Should Major League Baseball let pitchers bat? The Office or Parks and Recreation? There’s a lot of passion in the camps on either side, but ultimately these are subjective. pointless debates.
At some point, we’ll know what company will be the object of Ackman’s affection. Until then, traders would seem to have better options.
SPACs Should Be a Long Game
I know that as I typed that last sentence some traders will challenge me. I get it. If you buy now and the stock goes to $30 after the announcement, it’s a great trade no matter how long you held. But as my kids would tell you, I’m not a big fan of wasted motion. That’s what trying to time PSTH stock appears to be.
As speculative as SPAC investments are, I view them as long-term investments, not retail trades. That narrative changed for many traders in 2020.
The sheer number of SPACs that went public made them a target of traders. Hey, if Chamath Palihapitiya can bring one SPAC public for every letter of the alphabet it must be a numbers game, right?
I don’t agree with that sentiment. There’s a reason why it’s difficult for retail investors to get in on a stock before its initial public offering (IPO). It’s not impossible, but investing in a pre-IPO company is almost exclusively the domain of well-heeled investors.
But the same isn’t true of SPACs. In fact, SPACs are designed to draw the attention of retail traders (although PSTH stock has almost 70% institutional ownership) which can be both good and bad.
PSTH Stock Is a Barroom Debate
Some of the most passionate, and usually silly, debates are the barroom debates. These are debates that have no clear right answer, but in which people have strong opinions. That’s how I see the current state of PSTH stock.
Bill Ackman doesn’t owe investors an announcement in the near future. I agree it’s a bad look to strongly hint at an end of Q1 deadline and go radio silent, but that’s part of your due diligence as an investor.
Yet without a target it’s hard to find much to get excited about with PSTH stock. Particularly since the SPAC has been trading at a premium since day one. Simply put, if you’re trying to time the market based on when an announcement is made, you may be in for a long summer.
But that doesn’t mean that PSTH stock is a bad investment. As I mentioned above, institutional investors are still engaging with the stock. So there is at least some corroboration that Ackman will find a quality target. And if he does, PSTH stock may move higher.
However, here’s where I’ll give a nod to my colleague Thomas Niel who, I believe correctly, pointed out that there is very little downside risk to PSTH stock at its current price (below $25 per share at the time of this writing). But it’s hard to say definitively that there’s a lot of upside.
That will depend on the target. And now I need a drink.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.