• Market Crumbs

First SPAC ETF Hits The Market

Image via Imgur

2020 has undoubtedly been the year of the special purpose acquisition company, or SPAC. According to SPAC Insider, more than 115 initial public offerings for SPACs have brought in almost $44 billion in proceeds, which is more than the last five years combined.

Despite the popularity of SPACs so far this year, there hasn't been an exchange-traded fund, or ETF, dedicated to SPAC investing. That all changed yesterday when the Defiance NextGen SPAC Derived ETF, which is the first ETF to track blank check companies, made its debut on the New York Stock Exchange yesterday under the ticker SPAK.

"Picking the winners of individual SPACs can be very difficult, however the ETF structure allows investors to access the most liquid SPAC IPOs in a diversified basket," Defiance ETFs said. "SPAK allows both financial advisors and retail investors to participate in an IPO private equity style of investing, which until now was only available to large financial institutions."

The ETF has 29 holdings which are rebalanced quarterly and has an expense ratio of 0.45%. An 80% weighting is given to IPO companies derived from SPACs while 20% is allocated to common stock of newly listed SPACs.

The ETF's largest holding is DraftKings, which accounts for nearly 20% of the fund's assets. The other stocks rounding out the top five holdingswhich account for just over half of the ETF's assets, are Clarivate Plc, Vertiv Holdings Co., Open Lending Corporation and Broadmark Realty Capital Inc.

Co-founder Joshua Harris of asset manager Apollo Global Management, which itself is looking to raise funds through an initial public offering for a new blank-check company, says SPACs are here to stay.

"The SPAC part of the IPO market is a part of the market that's here to stay," Harris said. "There's a real need for quick, confidential capital and price certainty and for sponsorship in the markets. And most of the SPACs that have been done have been more emerging growth SPACs, less cash flow more growth. And what we see is the opportunity for sponsorship."

With SPAC deals seemingly taking companies public on a daily basis as of late, time will tell if the launch of a dedicated SPAC ETF marked a sign of a top in the latest craze to hit Wall Street or a generational buying opportunity.

Leftover Crumbs

  • Tokyo Stock Exchange hit by outage. The Tokyo Stock Exchange was forced to shut down trading on Thursday for the first time since it switched to all-electronic trading in 1999 as a result of a hardware problem in its "Arrowhead" trading system. The Tokyo Stock Exchange, the world's third-largest exchange, said the backup system failed to be activated and trading will resume on Friday. "I feel painfully responsible for all the confusion this incident has caused for investors and market participants," Tokyo Stock Exchange CEO Koichiro Miyahara said.

  • Volkswagen may spin off Lamborghini. Volkswagen is reportedly discussing plans to list Lamborghini publicly with bankers and potential investors. VW hopes to make Lamborghini a more independent brand and is lining up supply deals with hopes it will make an IPO easier to undertake. The sources said no timetable has yet been set and VW would likely retain a controlling stake in Lamborghini should it end up listing. Volkswagen Group CEO Herbert Diess said earlier this week that they would make an announcement regarding "important steps" for Lamborghini before the end of the year.

  • Icahn's son returns. Carl Icahn's son Brett has returned to Icahn Enterprises in a move seen as a step towards handing over control of the firm to his son. Brett will oversee a team of portfolio managers, buy a stake in the firm and serve on the board of directors. Brett previously worked at Icahn Enterprises, co-managing the Sargon Portfolio, which had annualized gross returns of 26.8% over its six-year history.

  • CFTC, DOJ charge BitMex. The U.S. Department of Justice and the Commodity Futures Trading Commission have filed charges against BitMex and its owner-operators, alleging they operated a platform that wasn't registered and violated anti-money laundering and know-your-customer regulations. "As we allege here today, the four defendants, through their company's BitMEX crypto-currency trading platform, willfully violated the Bank Secrecy Act by evading U.S. anti-money laundering requirements," FBI assistant director William Sweeney said.

  • San Francisco rents plunge. The median rent for a one-bedroom apartment in San Francisco has fallen by more than 20% from the same period a year ago to $2,830 per month, according to Zumper. Compared to the prior month, the median rent in the city has fallen by nearly 7%. "Despite everything our data is showing, there are so many signals that it will recover, however contrarian this point may sound," Zumper CEO Anthemos Georgiades said. "However, I think we're talking years to fully recover, not months."