🍋 What Happened to the SPAC King?
Good Morning! Activist investors are coming for media companies. Dan Loeb unveiled a stake in Disney, trying to get the entertainment giant to spin off ESPN, cut costs, and finally fully takeover Hulu. Meme stock traders are also getting vocal, and the social media support of Bed Bath & Beyond sent the stock up over 70% at its intraday high, encouraged by news that GameStop Chairman Ryan Cohen bought some calls on BBBY.
BBBY isn't the only thing that's up. New York City's pension costs will increase by about $6 billion over the next three fiscal years, thanks to high inflation and fears of a recession killing retirement plans. Things are looking tougher for Apple as well, as the company laid off 100 contract recruiters to slow down overall hiring.
With the public markets in flux, diversifying your portfolio with an asset class that provides the opportunity for outsized returns makes sense. Download the Sweater app to add venture capital to your portfolio.
1. Story of the Day: What Happened to the SPAC King?
SPACs were a huge movement, and Chamath Palihapitiya ("CP") was basically the movement's leader. Touting the fairly novel way to go public for a company, CP was a loud and proud proponent. Recently, however, news came out that two SPACs launched by him need to push back their acquisition deadlines, and CP has been awfully quiet about it.
For someone who boasted on Twitter and called himself the heir apparent to Warren Buffett, these deals didn't get the same love as those that went off without a hitch during SPACmania.
All 5 of his SPACs that merged with acquisition targets are down bad. Since February 2021 when CP tweeted "trust the process," Virgin Galactic stock is down nearly 90%.
The rampant fiscal and monetary stimulus in the economy gave us a lot, like meme stock millionaires and people who crushed it in crypto. SPACs were riding that wave as well, but the SEC filings about the king's two most recent transactions being pushed back, make it seem like the tide is heading out now.
One of the two SPACs is CP's largest ever, at $1.15 billion. It has pushed an October 2022 deadline to an unspecified time next year. Given the current outlook for the markets, getting a deal done then if it happens at all, will likely not be any easier.
Bill Ackman's $4 billion Pershing Square Tontine Holdings was the only SPAC bigger than CP's magnum opus. Three weeks ago though, Ackman canceled it handing everyone their money back. While SPACs were a side gig for Ackman, they are a big chunk of CP's portfolio. Given the tanking of the SPACs' values over the last 18 months, CP's wallet has definitely taken a hit.
Short Squeez Takeaway: Fads come and go, and it's no different in finance. Except it is because there's a lot of money at stake, and not just a few embarrassing pictures on a Myspace profile in the cloud. There's no doubt that disruption can be rewarded, but sometimes the end result looks a lot different from the start. The SEC will always get involved in the next big thing in finance, and unless it's harmless, you can bet they'll take the risk, and reward, out of it.
2. Markets Rundown
Stocks ended mixed after a winning streak as investors weigh strong earnings against a tough macro outlook. Crypto was down as Uniswap tumbled.
Movers & Shakers
- (+) Bed Bath & Beyond ($BBBY) +30% after peaking at almost up 70%, thanks to Ryan Cohen who placed a bet on the company, and meme stock traders swarmed to social media and their brokerage accounts.
- (+) Nu Holdings ($NU) +18% because the Buffett backed company reported quarterly revenues up 230% from last year.
- (–) ZipRecruiter ($ZIP) -5% because the company sees employers decreasing job listings and a weaker labor market, so it lowered its full year guidance.
- Bill Gates’ nuclear power company TerraPower raised $750 million
- Levita Magnetics, a robotic surgical platform startup, raised $26 million
- Gorgias, an e-commerce customer service company, raised $30 million
- Vista Equity Partners to acquire Alavara, an automated tax compliance provider, for $8.4 billion
- CareHarmony, a care coordination software provider, raised $15 million
- Solace Capital Partners sells Patriot Environmental Services for $156 million
3. Top Reads
- Climate bill could create 1,000 new companies, says Bill Gates’ climate VC head (CNBC)
- Inflation lures more higher-income shoppers to Walmart (Fox)
- Morgan Stanley makes big bet on meme-stock Revlon (Reuters)
- Starbucks illegally threatened Seattle workers (BB)
- The market is acting like there’s still more money on the sidelines (CNBC)
- How inflation has impacted your favorite fast food chicken sandwich’s cost (YF)
- Fed faces balance sheet dilemma as U.S. economy slows (Reuters)
- Oil in a long-term structural bull market despite drop (YF)
- ‘Big Short’ fund manager Burry, dumps entire portfolio, buys prison stock (Reuters)
A Message from Sweater
Looking for ways to diversify your portfolio with the current market conditions? Sweater allows anyone to start investing in venture capital with just $500.
Sweater gives you:
- A world-class investment team at your fingertips
- An ever-growing portfolio of high-growth private companies
- Flexibility with automatic recurring investments
- Educational content so you can learn while you invest
- A tight-knit community of investors and founders
With the public markets in flux, diversifying your portfolio with an asset class that provides the opportunity for outsized returns just makes sense.
Download the Sweater app to add venture capital to your portfolio, today.
4. Book of the Day: Get It Done
A great deal of ink has been spilled on the subject of motivating and influencing others, but what happens when the person you most want to influence is you? Setting and achieving goals for yourself—at work, at home, and in relationships—is harder than it seems.
How do you know where to start? How do you carry on in the face of roadblocks and distractions? How do you decide which tasks and ambitions to prioritize when you’re faced with more responsibilities, needs, and desires than you can keep track of?
With fascinating research from the field of motivation science and compelling stories of people who learned to motivate themselves, Get It Done illuminates invaluable strategies for pulling yourself in whatever direction you want to go—so you can achieve your goals while staying healthy, clearheaded, and happy.
“You might not hesitate to order a $12 cocktail at a restaurant, but you’d drive around the block a few times before paying the same amount for valet parking.”
5. Short Squeez Picks
How 651,824 Investors Are Changing Their Media Diet
We’ve all seen the headlines. The stock market is down 19% and >$7.3 trillion of blue chip equity value has been vaporized out of thin air. Sifting through the never-ending parade of clickbait about ‘record inflation’ or ‘inverted yield curves’ could be a full-time job.
Luckily, we have The Daily Upside — it’s a brand new newsletter started by a team of wall street insiders, bankers, and scholars that gives you access to insights with absolutely zero BS. The best part? It’s absolutely free. We read it every morning and you should too. Sign up here.
6. Daily Visual: High Yield Spreads Race Tighter as Recession Fears Ebb
US high yield corporate bond spread
7. Daily Acumen: Habits of Likeable People
They Greet People by Name
They Are Genuine
They Don’t Pass Judgment
They Use Positive Body Language
They Leave a Strong First Impression
They Don’t Seek Attention
They Know When to Open Up
They Balance Passion and Fun
They Ask Questions
They Put Away Their Phones
They Are Consistent
8. Crypto Corner by Bonkalytics.com
- Bill Gates explains why he doesn’t own any crypto
- Can the Texas power grid solve the crypto mining boom?
- Inside the crash of Three Arrows Capital
- Celsius on pace to run out of cash by October
- Fed opens pathway for crypto banks to tap central banking system
- Crypto skeptics have been debating online for years — they’re now organizing
For more crypto-focused content, sign-up here.
9. Memes of the Day
What'd you think of today's email?
Want to reach an audience of 150,000+ business leaders, young professionals, and policy influencers? Advertise in Short Squeez.