SPAC short-sellers have taken home $500 million in 30 days. These are the 10 most profitable blank-check companies to bet against right now.

  • SPAC short-sellers were up over $500 million in mark-to-market profits over 30 days. 
  • The increasing profits came amid a steep decline in SPAC market sentiment and performance. 
  • S3 Partners shared the 10 most profitable wagers as skeptics sold short another $265 million shares.
  • See more stories on Insider’s business page.

Short-sellers are descending on the SPAC market and making a killing out of it.

Investors betting against these so-called blank-check companies were up more than $500 million, or 16.92%, in net-of-financing mark-to-market profits in the 30 days through April 22, said a Thursday research note by Ihor Dusaniwsky, the managing director of predictive analytics at S3 Partners.

The increasing dollar value of bearish bets is in line with a downward sentiment shift in the SPAC market, which started showing cracks in early March when skeptics tripled their bets against SPACs to $2.7 billion from $724 million at the start of the year.

The billionaire Chamath Palihapitiya, who has been one of the most outspoken proponents for these cash shell companies, has seen short interest in three of his six SPACs skyrocket since mid-December.

Come April, the number of new SPACs coming to market ground to a screeching halt and was down more than 90% from March. Retail investors, who had driven much of the fervor in SPACs, have also largely disappeared from the market, Bank of America said.

One of the biggest headwinds stalling the pace of SPAC issuance is a recently released staff opinion from the Securities and Exchange Commission. The guidance, which hinges on whether some SPAC warrants should be reclassified as liabilities rather than equities, could also affect the quarterly financial reporting of existing SPACs.

As a result, a slew of SPAC exchange-traded funds that were launched during the multibillion-dollar boom of July 2020 to March 2021 declined by between 1.31% and 21.84% in the month through Thursday. That was based on the mix of pre-and post-deal SPACs in their portfolios, Dusaniwsky said in his note.

He added that this broad sector-wide weakness not only attracted an additional $265 million of SPAC shares to be sold short during the same period but also made most SPAC shorts profitable trades. Only 28% of all 885 SPACs followed by S3 Partners produced unprofitable results.

To be sure, Dusaniwsky said some of these short activities can be related to hedging activity against private investment in public equity deals or warrants, which are detachable from SPAC units.

But he still believed that most of the shorting is more technical in nature since there are no company fundamentals to analyze in SPACs. “It looks like short sellers are looking for price pullbacks in SPACs that have had large recent or historical price moves,” he said.

This explains why the two most profitable shorts, Churchill Capital Corp. IV (CCIV) and Social Capital Hedosophia Holdings Corp. V (IPOE), were also the two most shorted SPACs.

Backed by the former Citigroup dealmaker Michael Klein, CCIV accelerated almost 600% after reports in January said the company was nearing a deal with the electric-vehicle maker Lucid Motors. But its shares immediately plunged over 50% in a two-day slide after the long-awaited deal was announced on February 22.

Palihapitiya’s IPOE, which announced its merger with online lender Social Finance in January, peaked at $25.78 a share in February before starting its downward trajectory. It was trading at around $17.24 a share as of Monday’s market close.

As SPAC market sentiment continues to slide, some investors are taking advantage of the steep discount to scoop up SPACs trading below trust value for their arbitrage strategies, while others are actively shorting the downward slide.

Regardless, as Dusaniwsky said in his note: “Looking at short selling trends over time provides insight into overall market sentiment as well as the strength of bearish conviction in individual equities.”

Below are the 10 most profitable SPAC shorts over the past 30 days. All data was as of April 22.

1. Churchill Capital Corp. IV

Ticker: CCIV

Average 30-day fee: 3.49%

Average 30-day short interest: $727 million

30-day mark-to-market profit/loss: $249 million 

30-day mark-to-market profit/loss %: 34.29%

Source: S3 Partners

 

2. Social Capital Hedosophia Holdings Corp. V

Ticker: IPOE

Average 30-day fee: 36.36%

Average 30-day short interest: $412 million 

30-day mark-to-market profit/loss: $69 million

30-day mark-to-market profit/loss %: 16.77%

Source: S3 Partners

3. Star Peak Energy Transition Corp.

Ticker: STPK

Average 30-day fee: 3.84%

Average 30-day short interest: $97 million 

30-day mark-to-market profit/loss: $25 million 

30-day mark-to-market profit/loss %: 25.74%

Source: S3 Partners

4. Northern Genesis Acquisition Corp.

Ticker: NGA

Average 30-day fee: 13.99%

Average 30-day short interest: $54 million

30-day mark-to-market profit/loss: $15 million 

30-day mark-to-market profit/loss %: 28.68%

Source: S3 Partners

5. TPG Pace Beneficial Finance Corp.

Ticker: TPGY

Average 30-day fee: 12.64%

Average 30-day short interest: $53 million 

30-day mark-to-market profit/loss: $13 million 

30-day mark-to-market profit/loss %: 23.46%

Source: S3 Partners

6. VPC Impact Acquisition Holdings

Ticker: VIH

Average 30-day fee: 3.72%

Average 30-day short interest: $48 million

30-day mark-to-market profit/loss: $12 million

30-day mark-to-market profit/loss %: 25.01%

Source: S3 Partners

7. Pershing Square Tontine Holdings

Ticker: PSTH

Average 30-day fee: 0.30%

Average 30-day short interest: $122 million 

30-day mark-to-market profit/loss: $11 million 

30-day mark-to-market profit/loss %: 9.36%

Source: S3 Partners

8. Arclight Clean Transition Corp.

Ticker: ACTC

Average 30-day fee: 31.50%

Average 30-day short interest: $73 million

30-day mark-to-market profit/loss: $10 million

30-day mark-to-market profit/loss %: 13.07%

Source: S3 Partners

9. Stable Road Acquisition Corp.

Ticker: SRAC

Average 30-day fee: 11.71%

Average 30-day short interest: $31 million

30-day mark-to-market profit/loss: $9 million

30-day mark-to-market profit/loss %: 30.79%

Source: S3 Partners

10. Tuscan Holdings Corp.

Ticker: THCB

Average 30-day fee: 4.19%

Average 30-day short interest: $26 million

30-day mark-to-market profit/loss: $7 million

30-day mark-to-market profit/loss %: 25.31%

Source: S3 Partners

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