Topic: How To Invest

What is Pat’s commentary for the week of October 6, 2020

Article Excerpt

Recently a friend asked, “Any ideas re how I can get smarter about SPACs in Canada and how they vary from the U.S. versions?” My short answer(s): “No and no.” In fact, I can’t imagine a situation where I’d buy or recommend a SPAC (Special Purpose Acquisition Company), U.S. or Canadian. It all comes down to conflicts of interest. They are the biggest risk you face as an investor, because they’re everywhere. SPAC conflicts of interest are much bigger than the typical conflicts you face every day. SPACs are a specialized kind of IPO (Initial Public Offering, or new stock issue). One key difference is that SPACs, also referred to as “blank-check companies,” raise money from investors without providing a detailed business plan. The SPAC goes through an IPO-like process, raising some money and getting listed on an exchange. Its next goal is to find another business to buy, usually within two years. Then the two companies merge, giving the purchased company a..