SPACs - SPAC stocks explained - PSTH example
SPAC stocks are very hot now. Virgin Galactic, Nikola, Pershing Tontine and other 120 and more coming. Here is an overview of what you need to know about SPACs, special purpose acquisition vehicles. Be careful, you can't do the arbitrage hedge funds can do. This video will explain what SPAC stock are, use Pershing Square Tontine Holdings as main example, discuss the investing rational and the market situation.
0:00 SPAC stocks intro
1:02 What are SPACs
2:04 PSTH SPAC example
5:03 SPAC investing
9:00 SPAC stocks 2020
10:34 SPAC market
SPAC stocks are special purpose acquisition companies that managers set up to acquire or merge with a private company where they take it public.
This is exactly what Bill Ackman is doing with his Pershing Square Tontine Holdings (NYSE: PSTH) where his plan is to acquire a good company.
Hedge funds get involved too as there is a lot of arbitrage to do, warrants and other investment schemes that are usually not available to the retail investors. Hedge funds make good returns by investing in SPAC stocks while retail investors make very bad returns from investing in SPAC stocks.