Blank check IPOs, where public offerings are made with the promise to buy another company, have seen a record $78 billion raised this year. That’s more than the combined total of all blank check IPOs in all previous years. Some investors apparently don’t even care if the stocks they are buying are an actual business. If you have a business you have even thought about taking public, now’s the time. The IPO market is as hot and speculative as it has been since the dotcom bubble. Bloomberg has more: Special purpose acquisition companies, or SPACs, went from a back-of-the-shelf financial … [Read more...]

The SEC just greenlighted the NYSE’s proposal to allow companies to raise capital through direct listings. This is a big win for entrepreneurs, venture investors, as well as retail investors. It’s not such good news for the big banks that underwrite most of America’s initial public offerings, taking a criminal 7% of the proceeds in most cases and too often mismatching supply with demand. Big institutional investors also won’t like this news as it may eliminate the first-day IPO pop that few small investors can gain access to. The WSJ has more: The SEC approved the new kind of direct … [Read more...]

In The Financial Times, Peter Oppenheimer explains how the recovery from the COVID-19 crash could be different from previous recoveries. He writes: Global equity market capitalisation has grown to $100tn, roughly 115 per cent of global GDP — the highest level since the pre-financial crisis peak in 2007. But this scale of recovery is not unprecedented and bears a remarkable resemblance to the period after the trough in 2009 that followed the financial crisis, when the MSCI World index rose 68 per cent over a similar period. Conditions at the time of the 2009 trough were, however, very … [Read more...]

The IPO market is booming, or bubbling if you prefer. Doordash, a modern-day courier service, and Airbnb both came public last week. Doordash rose 87% from its IPO price and Airbnb was up 113%. Airbnb is now worth more than the combined value of Marriott, Hyatt, and Hilton. Below is a succinct summary of everything you need to know about today’s IPO market. Frothy conditions in the IPO market should be viewed as a caution flag. The WSJ reports: The valuations of the newly public companies are dwarfing older rivals. Airbnb is worth more than Marriott International Inc., Hilton Worldwide … [Read more...]

The Nasdaq stock exchange, the second-largest exchange in the world, wants to impose a quota system on corporate boards of companies that list on the NASDAQ. Nasdaq is serious…and specific. The new rule would require boards to have a minimum of one woman director and one minority or LGBTQ director. Small firms could apparently get by with two women. Do we really want to start affirmative action for American business? One can only hope the entrepreneurs that start businesses choose NYSE or other exchanges to list instead of submitting themselves to NASDAQ’s social mission. Here’s … [Read more...]

As we wrote in this month’s letter to our investment counsel clients, it’s been an unusual year. Renaissance Technologies and Two Sigma Advisers, two successful quantitative hedge fund managers would agree. Renaissance is one of the most successful hedge funds in the world. Renaissance's equities fund is down 20% YTD and Two Sigma’s funds are down 11%, 23%, and 2% as of the end of last month. What’s the takeaway? All investment strategies go through rough periods. If the strategy is fundamentally and logically sound, staying the course is the proper action to take. Bloomberg … [Read more...]

Marketwatch reports here that the Dow just completed its fastest bear market recovery in 30 years. It takes an average of 1,483 trading days for the Dow to hit a new all-time high after suffering a bear market. This time it took only 193 trading days. Trillions of dollars worth of fiscal stimulus and a monetary stimulus program that crossed multiple redlines helped quicken the recovery. Pro-growth regulatory policy was also a likely contributor. The truth is, investors who took on too much risk lucked out in this bear market. Prolonged bear markets are the most destructive variety. Next … [Read more...]

Ortenca Aliaj reports on Carson Block's harsh assessment of SPACs in the Financial Times, writing: Muddy Waters, the US short seller run by Carson Block, has launched a scathing attack on 2020’s hottest investment phenomenon, the special purpose acquisition company, and revealed it is betting against a company brought to market by former Citigroup dealmaker Michael Klein. In a report published on Wednesday, Muddy Waters said it had taken a short position in MultiPlan, a healthcare company that went public in an $11bn deal with one of Mr Klein’s acquisition vehicles earlier this year. Mr … [Read more...]