The current SPAC hype has some Wall Street Investors worrying that we may be experiencing a bubble. Robert Davis, a Partner and the Chief Investment Officer of Round Table Wealth Management who has over 20 years of experience in the financial industry, believes there are still many positives when it comes to investing in SPACs. He provides insights and feedback as to certain SPAC offerings to stay away from and where to invest currently.
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Bob On Pros And Cons With Investing In SPACs:
- When looking at investing in a SPAC, focusing on the management team is key. Unlike a private equity fund, if you disagree with the management team and what the company bought, you can redeem your shares which is a major positive.
- Another positive of investing in SPACs is that it allows individuals to get a chance to experience the best fund managers they may otherwise not have access to. For example, not everyone is able to invest in Bill Ackman's hedge fund. But with a SPAC, they can gain shares and access to his expertise as a professional money manager.
- The main concern about SPACs is that when you buy into them you don't necessarily know what the company will be merged into. Also, the management team may not have a track record and could be unfamiliar with the industry that they are lending their name to being part of. Sponsors are also incentivized to close deals quickly otherwise they have to refund their investors.
- Some of the SPACs being offered have negative earnings. So investors need to be knowledgeable about the fact that many of these companies need additional capital, and they are being valued on expectation of performance rather than past earnings.
About Robert Davis:
Robert Davis, a Partner and the Chief Investment Officer of Round Table Wealth Management, has been with the firm since 2006. Bob is the chairman of the firm’s Investment Committee and his responsibilities include the development, review and analysis of investment strategies, portfolio and risk management, asset allocation, manager selection and due diligence, and product review.
Bob has both a B.A. and M.B.A. from Southern Methodist University and has over 20 years of experience in the financial industry. Prior to joining Round Table, Bob served as vice president of a single-family office with over $1 billion in assets, where he was responsible for investments in both traditional and alternative asset classes. He began his career at a New York-based boutique investment bank. Bob holds both the Chartered Financial Analyst® and Chartered Alternative Investment Analyst designations. Bob enjoys playing competitive lacrosse, distance running and competing in triathlons.
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