Some Investors Find Stability in SPACs; Herb Greenberg on CNBC on GoodRx; How Mark Zuckerberg's stranglehold on Facebook could put the company at risk; More on Munger investing in apartment buildings; Knicks game last night

By Whitney Tilson

Thursday, October 14, 2021
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1) Following up on yesterday's e-mail, in which I mentioned the latest issue of my colleague Enrique Abeyta's Empire SPAC Investor (click here to find out how to gain risk-free access), this Wall Street Journal article highlights how out-of-favor the sector is, which to me is a very bullish sign: Some Investors Find Stability in SPACs. Excerpt:

As of Friday, the common shares of 452 of 469 SPACs [special purpose acquisition companies] looking for a target traded below their trust value, according to SPAC Informer, an analytics site started by Mr. [David] Sherman. Among all SPACs looking for a target, the combined trust value of $135 billion, the weighted average yield to liquidation was 1.71% and the weighted average maturity was 1.3 years. Just over a hundred SPACs offered a yield of at least 2.25%.

By comparison, the two-year U.S. Treasury note yielded around 0.32%, while a Bloomberg Barclays index of short-term corporate bonds was yielding 0.68%.

"If you're looking for cash alternatives, it's 10 times better than what's out there," said Evan Ratner, president of Levin Capital Strategies, which runs a fund dedicated to SPAC arbitrage.

Here's another bullish sign: The amount of money being raised by new SPACs is down by 85% in the past six months relative to the peak in February and March:

2) My newest colleague, Herb Greenberg, was on CNBC's Fast Money on Tuesday to share why we're bullish on GoodRx (GDRX), which Enrique recommended in his Empire Elite Growth newsletter on May 26. The stock is up 15% since then... and Enrique thinks big upside is still ahead.

You can watch Herb here, and Empire Elite Growth subscribers can click here to read Enrique's write-up on GoodRx. (If you aren't a subscriber, you can find out how to gain access here.)

3) I was quoted in this Business Insider article about Facebook (FB) yesterday: 'The most powerful person who's ever walked the face of the earth': How Mark Zuckerberg's stranglehold on Facebook could put the company at risk. Excerpt:

Experts told Insider that there is cause for concern around one person having control over a controversial family of platforms that affect hundreds of millions of people.

"I don't think it's a stretch to argue that Mark Zuckerberg is the most powerful person who's ever walked the face of the earth, and I think that kind of power being held by one person is generally a bad idea," Whitney Tilson, a former hedge fund manager and CEO of Empire Financial Research, told Insider...

However, last week's hearing with Haugen and her disclosure of internal documents to the U.S. Securities and Exchange Commission [SEC] could change things, Tilson said, though it's not likely.

If the SEC investigation finds that Facebook misled investors by failing to disclose research of negative harm on teens, among other findings, then the agency could demand that he step down, according to Tilson.

"That would be the only way I can think of that would overcome his controlling voting shares," he said.

4) Following up on my recent e-mail about investing legend Charlie Munger buying apartment buildings, a friend wrote:

We have been investing lately in multifamily housing with a very smart young man I have known for 20 years. Why?

  • Tax-deferred income (25% on income when you do pay – 22% tax rate on total return)
  • Great inflation hedge (rents reset every 12 months; long-term hard asset financed by long-term fixed-rate debt – best inflation hedge in the world)
  • High current income (difficult to come by these days)

My friend buys in underinvested secondary markets from mom-and-pop operators and generates 55% of his returns from simply managing the properties better.

5) My middle daughter Emily's new job at Madison Square Garden Sports (MSGS), which owns the New York Knicks and the New York Rangers, is paying off for the rest of us, as she got us nice seats to last night's preseason game against the Detroit Pistons – the first of many we hope!

 Best regards,

Whitney

P.S. I welcome your feedback at [email protected].

Whitney Tilson
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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to more than $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor's degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

Click here for the full bio.