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SPCX: SPACs Are The 'Canary In The Coal Mine'

Harrison Schwartz profile picture
Harrison Schwartz


  • Special Purpose Acquisition Companies have seen an immense increase in activity over the past year as retail investors have piled into the market.
  • The boom in SPAC activity has promoted the launch of SPAC ETFs such as SPCX which allow investors an easy way to buying a wide basket of blank check companies.
  • Too much SPAC money chasing too few quality firms may cause an increase in deals at unattractive valuations or with "regulatory patchy" companies.
  • The startling growth of SPAC activity may indicate that the bull market is peaking as investors pile into increasingly unproductive investments, including SPACs and, more recently, NFTs.
  • Considering the environment as well as poor historical returns of SPACs (largely due to immense promoter fees), investors may want to avoid SPCX for the time being.

Close-up of blank bank check sample against white background
Photo by Oddphoto/E+ via Getty Images

The past twelve months have seen a boom in special-purpose acquisition companies also known as SPACs or blank check companies. These are companies that raise cash intending to eventually acquire private companies and bring

This article was written by

Harrison Schwartz profile picture
Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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 (21)

SPAC is more like an instrument for companies to go public with, wouldn't consider them from the retail perspective
@Waveriderjeremy , I won't touch them!
"...seen an immense increase in activity over the past year as retail investors have piled into the market."

That's the classic sign when a bull market is about to collapse. The 'weak hands' jump in and buy up the high flying issues that 'strong hands' are all too happy to sell to the FOMO crowd.
@Mike the Elder , And they will all deserve it when they get caught in a big stock market crash!
One of the worst articles I’ve read on Seeking Alpha. Apparently the author has no clue at all about SPCX, its strategy and particularly its holdings. He waffles on about the SPAC market in general and makes some good points but these are totally irrelevant to SPCX
@GwailoHK I disagree. I think he is right on target. These blank check pooled funds are not investments. You have no idea what you are buying. It's pure funding for speculation based on someone's deal making ability. Who makes the most money? People that organize SPACs and initial investors.
@jasonjones you are not getting my point. Again, all the things the author and you mentioned are valid but they are just a general description of the SPAC market.

I thought this was supposed to be a discussion about SPCX?

SPCX's holdings (at the moment) trade at or close to NAV (e.g., their biggest holding PRPB closed at 10.01 yesterday and their second biggest holding SVAC closed at 9.98).

So it is highly unlikely that SPCX will crash from here due to the NAV floor. There are other SPAC ETFs out there which are far more risky. SPCX is really the most conservative and lowest risk SPAC ETF that exists today.
Shamanski profile picture
These people are clueless, look at all the comments. It is just a bunch of uninformed investors making generalizations. Like you say, they don't even understand how SPCX works. Then they make the stupidest generalization in markets- some are bad so therefore all are bad...

One phenomena we see over and over again in the market. The underperforming crowd always whines and complains about all the stocks that go up a lot. These people are too busy whining and crying instead of learning how to buy great SPACs.

If you don't have the investing competence to find and buy high quality SPACs, then how can real stock pickers take you seriously??
Lumping all SPACs into the same bucket is a lazy take. Sure, many are speculative in nature, and will fail. However, there are many SPACs merging with established companies w/ legitimate revenue like DGNR, IPOE, WPF...the list goes on. Not to mention, companies like DKNG, TTCF, FREE, PSFE, etc. who have already merged and are also legitimate companies. A SPAC is no different from any other investment - many will fail, and some will be great. It’s on each individual investor to do the research and make an informed decision for themselves.
Lawrence J. Kramer profile picture
"but I personally believe personal investors are usually best doing their own due diligence."

But the point of buying a SPAC is to have someone else find a stock for you. People who buy SPACS are the kind of people who would pay someone to pick SPACs.
All you have to do is say Innovation in your fund title and people will pile in. We are seeing huge speculation. Money will be made and lost. Great article outlining the dangers. 1929 all over again.
I will not buy SPCX.
Ftoc is a spac that should be a big winner. Payoneer. A real business undervalued by the spac crash. There will still be future winners.just gotta do your homework on these!
Shamanski profile picture
SPACs are some of the best investments in the market, you just have to pick out the quality names. But high quality is there, go and get it.
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