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Some big U.S. hedge funds loaded up on SPACS, value stocks during first quarter
By David Randall
Reuters
NEW YORK (Reuters) - A number of well-known U.S. hedge funds bought value stocks and blank-check acquisition companies, selling some winners from the technology-led stock rally as bond yields rose during the first quarter, filings released on Monday showed.
Special-purpose acquisition companies, known as SPACs, proved popular among hedge fund managers, with funds such as Third Point and Saschem Head adding shares of SPACs, including FinTech Acquisition Corp V and healthcare company Orion Acquisition Corp to their portfolios.
Tiger Global added shares of Revolution Healthcare Acquisition Corp and Soaring Eagle Acquistion Corp and trimmed its position in Facebook Inc.
SPACs End Week on a High (Kind of)
The SPAC market is still stuck in a kind of stasis with most SPACs meaningfully below NAV, or for a rare few with deals fighting to stay above, but at least it didn t get worse today.
Author:
Investors saw the broader market rebound from a dismal few days with the S&P up 1.49% and the NASDAQ up 2.32% and even SPACs showed some lift. That said, the average pre-deal SPAC is still trading at $9.83 well below NAV.
Yesterday we pointed out that the pitchforks are out for Chamath and SPACs and today will have been a nice, if minor, respite for both.
The recent SPAC deal momentum lacks any punch as 10 of 11 May deals are trading below $10. Today s deals (SWBK, CENH) not likely to break the trend. Expect more credit investors to join as it is all about yield now.
Author Bio
Zhiyuan Sun is a statistician with a knack for analyzing clinical trials and company financials. Investing in healthcare and cannabis is his passion, as well as looking out for new, actionable stock investment ideas in these sectors. Fool since April 2020. Lives in Québec City, Canada. Follow @Bio Chameleon
Biotech stocks are popular with investors because of their drugs life-saving benefits and strong intellectual property moats. Current patent laws allow drug developers market exclusivity for two decades from the date of filing. This gives them a virtual market monopoly on their products. A portion of their sales is then reinvested into research and development, leading to a sustainable and wildly profitable business model.