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3 Bubbles – Catch Them Before They Pop!

Jul. 09, 2020 3:49 PM ETQNGYQ12 Comments
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  • Tech.
  • Environmental, social and governance (ESG) investing.
  • Special purpose acquisition companies (SPACs).

I am a timid bear on tech. I have too hard a time justifying current market multiples to own much but am cowed by the combo of fed liquidity, retail speculators, and high frequency traders to short much either. So while I am not going to take on the fed, Robinhood punters, and RenTec computers at the same time, I certainly think that the tech market is in a bubble.

ESG is another bubble. It is ideal for corporate managers to be good environmentalists and have nice social qualities but those are personal virtues. Their day job is to make shareholders money, but that is increasingly a minority view of a shrinking remnant of non-woke capitalists such as myself.

Thirdly, while I like researching and investing in SPACs and have a SPAC dedicated fund, there are undeniable signs of a bubble in certain SPAC deals. Whereas just a few months ago one could buy a basket of SPACs at a discount to trust value, today you would need to pay a premium for that basket.

Today, you can buy CITIC (CCAC.U) units consisting of a CCAC share and a half of a CCAC/W warrant and take advantage of all three. This special purpose acquisition company (SPAC) is seeking a deal target focused on energy efficiency, clean technology and sustainability, with a focus on Asia in particular China. The sponsors have put up over $7.5 million of their own money. They have until February 13, 2022 to find a deal. What’s special about this one in particular is that for such a hot area as an ESG tech SPAC, it doesn’t cost that much to participate. They have $10.06 of cash per share in their trust account, which is more than their shares cost, which last traded at $9.91 per share.  You risk next to nothing on the downside and get exposure to the ravenous demand for tech, ESG, and SPACs.

Analyst's Disclosure: I am/we are long CCAC.U.

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