Adding Value Through the Use of Pre-Merger Special Purpose Acquisition Companies (“SPACs”)
Investors are challenged to navigate the uncertainty and volatility in today’s market. This should come as no surprise to any investor given the global geopolitical risks, supply chain disruptions, the uncertainty around central bank(s) tightening, inverted yield curves, spiking inflation at 40 year highs, and so on. It is during these uncertain times that having an uncorrelated, all-weather strategy that can help protect your clients’ assets, while also offering upside participation becomes increasingly important to an overall portfolio. This is precisely the environment when absolute return focused strategies may “earn their keep”.
While there are many types of strategies that fall within the absolute return bucket (M&A Arbitrage, long/short, market neutral, etc.), we focus on a unique strategy that we believe offers superior risk versus return characteristics. That is investing in Pre-Merger SPACS, perhaps more commonly known as “SPAC Arbitrage”. While SPACs have seen a slew of negative headlines as of late, Pre-Merger SPACs have actually continued to serve as a relatively safe haven amongst hedge funds and savvy investors alike.