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Buy Alberton Acquisition Corp.'s Rights, Not The Warrants

Michael-Paul James profile picture
Michael-Paul James


  • Alberton Acquisition Corporation has announced a merger with SolarMax Technology, Inc., a solar panel engineering, procurement, and construction service.
  • SolarMax Technology, Inc. has installed more than 12,000 systems in the US and the largest US-based solar developer in China today.
  • Each warrant is exercisable for one-half of one ordinary share.
  • Each right receives one-tenth of one ordinary share at the merger.
  • At today's price, buy the rights, not the warrants.

I would like to present an argument on why investors should buy the rights and not the warrants to Alberton Acquisition Corporation (NASDAQ:ALAC). As this piece is directed to those already invested in the firm, I will offer a short introduction to the merger and focus on an investment strategy.

On Oct. 28, 2020, Alberton Acquisition Corporation entered into a merger agreement with SolarMax Technology, Inc. Alberton Acquisition Corporation shares have a value of $300 million. After the merger, they will be listed on the Nasdaq under the ticker SMXT.

The Target Firm

SolarMax Technology, Inc. is a solar panel engineering, procurement, and construction (EPC) service firm, founded in 2008. Each project consists of a custom design and installation completed by the firm, assuring that each specification meets company standards. They have recently expanded into electric car charging and offer in-house financing to customers.

They design and assemble solar panels in their 165,000 square foot facility in Riverside, California. They have already installed more than 12,000 systems. In 2015, they expanded into the Chinese market through the expansion of antipollution programs, becoming the largest US-based solar developer in China today. They launched their FLEX Energy Storage Systems in 2016, which doubled the energy storage capacity of their previous system. They primarily operate solar farms in China and sell solar energy systems in the US.

Operating since 2008, they have increased revenue annually. SolarMax Technology, Inc. retained $57 million in sales for the 12 months ending on September 30, 2019. I am bullish on the firm. They have been in the industry for more than a decade and aggressively grown their project portfolio annually. Information on the recent financials has yet to be released and an investor presentation is not publicly available. I expect their business to benefit from the Biden administration. The promo video can be

This article was written by

Michael-Paul James profile picture
Love to research. Sucker for innovation. Excited when I find value in depressed assets. Soft spot for REITs. An equity-only investor who carries a diversified portfolio between 40 and 80 stocks at any given time. Mitigate risk through diversification. Never allow a position to exceed 5 percent of my portfolio nor take a position at less than 1 percent. Returned to graduate school to devote my life to research. Trading is a passion. Research firms for enjoyment or when I need a break from the grind. 4 master's degrees in real estate, business administration, architecture, and urban design. Currently getting my PhD.

Analyst’s Disclosure: I am/we are long ALACR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (32)

We are almost a year since you wrote this, how do you feel about ALAC now?
October 26, 2021 is the extended merge deadline.
rtj321 profile picture
Any new insights here?
SPAC lover profile picture
this is a wicked company.

got some ALACR at 40 cents. sold today at 65 cents
SPAC lover profile picture
The merger success rate is about 60%. But it is on very thin ice.
It needs to keep $5 million + in the trust account. Without PIPE making it a bit risky. It may have about $7 million to 9 million now. Insiders control majorities of the shares. almost all of the initial IPO 10 million shares have been redeemed at $10.51. Not sure how it has met the>300 shareholder limit for NASDAQ listing, but it has done that.

for now, ALAC > $10. After the merger, it would likely fall below $10 so if you bought ALACR, convert quickly after the merger is done and sell it.

SolarMax is not a good quality company or it would not accept the condition to merge with ALAC without any cash or PIPE money. It is just using ALAC to become a public company. The sponsor is trying to keep its free sponsors' shares and warrants live.
SPAC lover profile picture
There is no PIPE, there are only $4 million shares left. Most of the original ALAC unit buyers have redeemed their money at $10.50 in April 2020 while they approved the extension.

The deal is a possible but slim chance.

NASDAQ may delist it since it does not have 300 shareholders (unless all Seeking Alpha members buy one share each).

That is why ALACR< 50 cents.

ALAC at $10.89 is an illusion since it is not actively traded. Insiders are holding it trying to get the deal done.
SPAC lover profile picture
Agree that Rights are better than Warrants.

However, ALAC is no longer a Blank check company. Most of the fund has been redeemed. It is now an empty check company.

SolarMax would get ALAC stocks but no Cash money.

That is the main risk. Unless SolarMax tries to save ALAC, or try to go to the public.

You can see ALAC trading volume very low. its stock price is more or less an illusion. There is no money left in Trust fund (maybe a few $million, not normal $100 or $200 million in most SPAC)
SPAC lover profile picture
There is no more money in the Trust Fund.

Trust Account

Following the closing of the Initial Public Offering on October 26, 2018, an amount of $100,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”). Following the closing of underwriters’ exercise of over-allotment option on November 20, 2018, an additional $14,879,920 of net proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust Account to $114,879,920.

On April 23, 2020, the Company filed an amendment to its Articles of Association with the Registrar of the British Virgin Islands to extend the time that it needs to complete an initial Business Combination from April 27, 2020 to October 26, 2020 or such an earlier date as determined by its board of directors (the “Extension”). In connection with the Extension, shareholders holding 10,073,512 public shares exercised their right to redeem such shares for a pro rata portion of the Trust Account. As a result, an aggregate of $105,879,118 (or $10.51 per share) was removed from the Trust Account to pay such shareholders.

On October 26, 2020, the Company filed an amendment to its Articles of Association with the Registrar of the British Virgin Islands to extend the time that it needs to complete an initial Business Combination from October 26, 2020 to April 26, 2021 or such an earlier date as determined by its board of directors (the “Second Extension”). In connection with the Second Extension, shareholders holding 1,000 public shares exercised their right to redeem such shares for a pro rata portion of the Trust Account. As a result, an aggregate of $10,770 (or $10.77013 per share) was removed from the Trust Account to pay such shareholders.
04 Mar. 2021
hey i got some rights as you recommended. this stocks behavior and the management vagueness is worrying, no investor presentation yet and lots of wierd stuff. do you think we should be worrid here? thanks!
rtj321 profile picture
@Michael-Paul James do the rights expire in April? That could be the clear reason why they are trading so low, if that is the case.
Michael-Paul James profile picture
@rtj321 "Rights are convertible only upon consummation of an initial business combination." This implies that the rights are valid until an initial business combination. I found no notes on the expiration of rights except for the following: "In the event of a liquidation prior to our initial business combination, all of our warrants and rights, including the private warrants and rights will be worthless." If the SPAC is dissolved rights are worth zero. Remember you must have multiples of 10. You must "hold rights in multiples of 10 in order to receive shares for all of your rights upon consummation of the initial business combination"

You can read the s-1 here. All quoted words can be searched to find the sections in the document. S-1s are very long :)
rtj321 profile picture
@Michael-Paul James Thanks for the reply. I was only going off of nasdaq's site for quoting, that says they expire April 26th, 2021
ArcterikLLC profile picture
@Michael-Paul James Do you think this is still on track? The rights are trading higher than I would expect if it were dead, but they’ve provided no updates.
As of right now February 25th 2021 at 6pm the stock has dropped to $11 while the warrants have fallen to 0.75 and the Rights to 0.67. It is looking really bad for ALAC. Not sure what is going on as there is no bad news out there, except that they regained compliance to remain on NASDAQ. They failed to hold an annual shareholders meeting but are now planning on holding one, no date is set yet.
Michael-Paul James profile picture
@bluenautica Investors may be concerned that the merger will not consummate.
Capital Gains profile picture
Great explanation and information, thanks a lot
Owen213 profile picture
The real takeaway here is that a company that hasn't updated it's website in months is now up 30% in 2 months at $14 with no news on it's DA. This is gambling not investing.
Michael-Paul James profile picture
@Owen213 Gambling generally consists of a rake. The pot shrinks as players play. I understand that the market has similarities to gambling. But, in the market, the pot increases not shrinks over time.

All risky behaviors don't necessarily mean gambling. Under that paradigm, all life is gambling, because all decisions involve some risks.

Investing in the market involves growing assets, and examining the risks and rewards of trades. In the long term, most win because the pot keeps getting bigger. Taking small positions minimizes the effects of a poor decision. But, even the great Warren Buffett bet big (40% of his portfolio, which is really risky) on American Express. It was one of his best trades. Even the Oracle of Omaha occasionally made a bad trade (Dexter Shoes, US Air, ConocoPhillips) but managed his overall portfolio phenomenally. He carefully looked at the risks and rewards and decided to make the trade. There are no guarantees. Every trade has risks. Anyone that tells you otherwise is selling something.

Diversified portfolios help mitigate risks. Another one of the great investors only invested in trades that had an expected return of 5 to 1 (I cannot recall his name right now). His argument was that he only had to be right 20% of the time. He was a great researcher and carefully considered each trade. I would not go all-in on this trade but I believe it is a good one. Many great traders have lost everything. That is just the nature of investing.

I just hope I am right more often than I am wrong :)
What are your odds that the merger goes through. I own the stock.
Michael-Paul James profile picture
@joelav I only know of 3 SPACs that have failed to merge. Akazoo failed to merge with Modern Media Acquisition Corp due to falsified documents. TGI Fridays terminated their SPAC merger with Allegro Merger. CEC Entertainment, Chuck E. Cheese, failed to merge with Leo Holdings. Both failed due to changes in market conditions and debt. SPAC failures are uncommon.

Thinking about this holistically. Both sides are motivated to make this succeed. ALAC is an old SPAC and if this fails they will likely be dissolved. They would be highly motivated to make this work. SolarMax will be motivated because even with the delays the stock price has already exceeded the $10 base by more than 30%. That makes the insider shares more valuable and liquid. They would also be highly motivated.

I acknowledge that there are unusual delays. The trade warrants careful consideration of all factors. The article may make the rights go up but if the merger fails the rights are worthless. All investments have inherent risk. The risk to return on this trade is within my risk tolerance. The trade offers a reasonable reward for my risk. I have estimated a 60% upside for the rights. If I assume the SPAC has a 66% or better chance of success then I am satisfied. The historical record doesn't offer any evidence that the probability of failure is greater than my assumptions.

My portfolio consists of around 50 positions that are well diversified in many sectors. I never take a position larger than 5% of my holdings. In the context of my portfolio, the risk is worth the return.
@Michael-Paul JamesThanks - with the ESG agenda getting more and more steam I see this one as a big winner.
willpetty profile picture
Rather a lot of fractions here - always makes me wonder.
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