I have covered the current SPAC Mania already in a post in June on Nikola, but since then SPACs only seem to gather more steam.
VC legend Bill Gurley (Banchmark Capital, Uber) has released an interesting post on the three main venues for a company to go public: A “classic” IPO, a simple listing and finally the SPAC.
I’ll try to summarize his post:
- he argues that the IPO process is “broken” and rigged by the I-Banks. His proof is that on average, IPO’s are “Popping” ~20% on the first day of trading which means that this difference, multiplied by the number of shares placed, is “stolen” from the previous owners (i.e. himself as a VC)
- on top of that, companies have to pay IPO fees
- The reason is that banks prefer special clients and do not really match demand and supply
- as direct listings (Spotify) do not allow to raise large amounts of money, reverse mergers with SPACs are preferable
- He argues that SPACs have “lower cost of capital” than IPOs but doesn’t give any examples. His main “proof” here is that there are so many SPACs now and that companies can negotiate really hard.
- and of course the way to public markets is a lot faster for a SPAC
Bill Gurley is clearly not an idiot as he most likely is now a billionaire following some very impressive investment successes (Uber) with Benchmark capital. However I do think that his arguments have some serious flaws.
Another week, another 25 randomly selected German shares. This time, I only found 3 of them to be interesting, however one stock became the biggest position in my German basket yet.
626.Pommersche Provinzial-Zuckersiederei AG
Pommersche is a 2.3 mn market cap company that is very illiquid and only releases very intransparent information. “Pass”.
627. Netfonds AG
Netfonds AG is a 63 mn EUR market cap company that could describe itself as a “Fintech” if they wanted. The company listed directly (no IPO) in 2018 and at first struggled:
InterActice Corp (IAC) is a company I had on my list for a long time but for whatever reason I never managed to look at them in more detail. Over the past few weeks I read in several quarterly reports of good funds that they had invested, so I decided to look at least a little bit deeper this time.
Founder/ Chairman Barry Diller
InterActive is the creation of Barry Diller, who is now 78 Years old. He had a very interesting career. As a media executive, among other things, he created Fox Network, and mentored media executives such as Michael Eisner (ex CEO of Disney).
He took control of IAC in 1995 and finally bought out “Cable Cowboy” John Malone in 2010. The relationship with Malone was long but not always without issues.
Another 25 randomly selected German stocks. This time, there is only one “watchlist candidate” among them.
601. Elbstein AG
Elbstein AG is a 29 mn EUR market cap holding company that is majority owned (75%) by the billionaire Ehlerding family. The company invests among others in listed German companies. The stock price is flat over the last 5 years or so which might indicate that the investment success is limited. Nothing to see for me, “Pass”.
602. Rheinland Holding AG
Rheinland Holding is a small German Insurance company with a market cap of 119 mn EUR. The stock chart is “super boring”, although with a small long term uptrend that one rarely sees with insurance companies over this period: