Investing in a special purpose acquisition company requires a certain amount of bravado in the best of times. But in the case of Bill Ackman's Pershing Square Tontine Holdings, Real Money columnist Jim Collins has pretty clear advice.
Don’t do it, he argued in a recent Real Money column. ”The financials for a SPAC never look good, until its target acquisition is completed. I have never seen numbers as ugly as [Pershing Square Tontine Holdings] PSTH's, though.”
Collins added “Ackman clearly thought he had a deal with an agreement with Vivendi to buy 10% of Universal Music. That deal fell apart in July, as the Securities and Exchange Commission wisely moved in to block consummation of the UMG deal.”
Collins added: “I tried. I attempted to watch Bill Ackman's infamous interview on CNBC in March 2020, while doing background research … I just couldn't do it. When he starts to sniffle, it is just too much. I couldn't last another minute. When Ackman stopped sniffling and said “hug your kids” or something like that, I reached my limit.”
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“So, this is exactly the type of guy I would give my money to in return for access to a vehicle that has no assets and whose largest line item on its income statement is legal fees?”
Pershing Square Tontine has taken steady, solid losses. Their stock price has fallen below the firm’s $20 IPO, a drop which looks even uglier when you consider that it peaked well above $30 before tumbling back down.
“PSTH shares have fallen 26% year-to date-and they will continue to be pummeled, I believe.”
Collins also pointed out a recent Institutional Investor article which detailed losses suffered by 17 investors in the SPAC, adding “in the world of SPACs, the phrase caveat emptor always applies.”