Author Topic: Investing in SPACís  (Read 802 times)

TrashIsCash

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Investing in SPACís
« on: April 27, 2020, 10:25:06 AM »
Hello, I am looking at a company, Concrete Pumping Holdings (BBCP).  They are a former SPAC, Industrea Acquisition Corp. 

Can anyone comment on the skewed (Or screwed)  incentives for the original sponsors or shareholders?  EG, are the original sponsors paid a success fee upon the acqín of a company, then they bail as shareholders?  Or are incentivized to be long-term shareholders? 

The SPAC bought the formerly private company, Concrete Pumping Holdings, from a PE firm, Peninsula Pacific.  So, I assume that they didít get a bargain price or were paid to do a deal quickly.

BBCP has a ton of debt, but their outlook for 2020 is generally positive and their # priority is to deliver. 

Thanks for your help, Peter


BG2008

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Re: Investing in SPACís
« Reply #1 on: April 27, 2020, 10:28:25 AM »
Hello, I am looking at a company, Concrete Pumping Holdings (BBCP).  They are a former SPAC, Industrea Acquisition Corp. 

Can anyone comment on the skewed (Or screwed)  incentives for the original sponsors or shareholders?  EG, are the original sponsors paid a success fee upon the acqín of a company, then they bail as shareholders?  Or are incentivized to be long-term shareholders? 

The SPAC bought the formerly private company, Concrete Pumping Holdings, from a PE firm, Peninsula Pacific.  So, I assume that they didít get a bargain price or were paid to do a deal quickly.

BBCP has a ton of debt, but their outlook for 2020 is generally positive and their # priority is to deliver. 

Thanks for your help, Peter

Peter,

I hope you are not an investor in the name.  I have tracked SPAC for a decade now and used to own them as a cash alternative.  You will find some of the most mis-aligned interest in this category.  They have every incentive to do a deal without regards to quality.

As a category, this is not a good space to hunt for value. 

Gregmal

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Re: Investing in SPACís
« Reply #2 on: April 27, 2020, 10:42:08 AM »
Hello, I am looking at a company, Concrete Pumping Holdings (BBCP).  They are a former SPAC, Industrea Acquisition Corp. 

Can anyone comment on the skewed (Or screwed)  incentives for the original sponsors or shareholders?  EG, are the original sponsors paid a success fee upon the acqín of a company, then they bail as shareholders?  Or are incentivized to be long-term shareholders? 

The SPAC bought the formerly private company, Concrete Pumping Holdings, from a PE firm, Peninsula Pacific.  So, I assume that they didít get a bargain price or were paid to do a deal quickly.

BBCP has a ton of debt, but their outlook for 2020 is generally positive and their # priority is to deliver. 

Thanks for your help, Peter

Peter,

I hope you are not an investor in the name.  I have tracked SPAC for a decade now and used to own them as a cash alternative.  You will find some of the most mis-aligned interest in this category.  They have every incentive to do a deal without regards to quality.

As a category, this is not a good space to hunt for value.

Put this thinking in reverse. SPACs(post deal) are great investments. Run screens, track deals, follow categories and sectors that you instantaneously hate, get excited about ones with 18 month terms that find deals in month 17....wait, and your candidate list of potential shorts will be much greater.

5xEBITDA

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Re: Investing in SPACís
« Reply #3 on: April 27, 2020, 02:44:58 PM »
Yah, as others have said, once a SPAC has made its acquisition its better to just move on...you're not investing in SPACs at that point, you're investing in a trash can company.

BG2008

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Re: Investing in SPACís
« Reply #4 on: April 27, 2020, 04:17:01 PM »
Hello, I am looking at a company, Concrete Pumping Holdings (BBCP).  They are a former SPAC, Industrea Acquisition Corp. 

Can anyone comment on the skewed (Or screwed)  incentives for the original sponsors or shareholders?  EG, are the original sponsors paid a success fee upon the acqín of a company, then they bail as shareholders?  Or are incentivized to be long-term shareholders? 

The SPAC bought the formerly private company, Concrete Pumping Holdings, from a PE firm, Peninsula Pacific.  So, I assume that they didít get a bargain price or were paid to do a deal quickly.

BBCP has a ton of debt, but their outlook for 2020 is generally positive and their # priority is to deliver. 

Thanks for your help, Peter

Peter,

I hope you are not an investor in the name.  I have tracked SPAC for a decade now and used to own them as a cash alternative.  You will find some of the most mis-aligned interest in this category.  They have every incentive to do a deal without regards to quality.

As a category, this is not a good space to hunt for value.

Very true if you can find cheap borrows

TrashIsCash

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Re: Investing in SPACís
« Reply #5 on: April 27, 2020, 04:38:23 PM »
So, other than the misalignment of interests, overpaying for acquisitions, tons of short sellers (who are smarter than me), I may have found the perfect investment.

All kidding aside, thanks for your feedback.  And, no, I am not an investor nor will I be.