Investing in SPACs

There has been a lot of heat recently in the SPAC market. Here is some reasons why investing in SPAC is almost potentially low risk.

1. SPACs can be redeem at NAV (10 USD) even if the share price drips below 10 USD*

Here is a scenario if I purchase a 200 shares of SPAC at 10.40 USD and want to redeem it.

If you redeem your SPAC shares at a value of USD 10 / share, you will lose 0.40 USD per share. The commission you pay will be 2 USD to Tiger Brokers, 0.01 USD SEC membership fee, and 7% GST on the aforementioned fees (7% x 2.01 USD = 0.14 USD). Hence, the total fee you pay will be roughly 2.14 USD in total.

a) Your net loss is 82.14 USD (80 USD from capital losses + 2.14 USD from fees)

b) You receive 1997.86 USD (10 USD/share x 200 shares - 2.14 USD fees).

The upside is unlimited and your downside risk is 82.14 USD from purchasing 200 shares of the SPAC.

If you bought the SPAC at 10 USD, your downside risk is only the commission you have to pay 0.01 USD / share + 0.01 USD SEC membership + 7% GST (Singapore)

*confirmed by Tiger Broker

2. Unlimited Upside

As mentioned the upside for a SPAC is unlimited. Some SPACs have gone up 10% to 600% $Churchill Capital Corp IV(CCIV)$ or more. Personally I am invested in almost 70 different SPACs. The most I have paid for any SPAC is $12 to limit my down side risk. There are many quality SPACs now trading at 10 USD or below!

Here are 2 of my favourite ones:

$Soaring Eagle Acquisition Corp(SRNG)$Rumour to merger with Gingko Bioworks. Biology is one of the industries that is touted to boom in the next decade.

$Avanti Acquisition Corp(AVAN)$Great management team

Disclaimer: This is not trading advice, merely sharing my thoughts.