Billionaire investor Chris Sacca says he’s been invited to sit on SPAC boards and do nothing

Getty Images chris sacca donald trump shark tank
Chris Sacca.

  • Chris Sacca has been invited to sit on SPAC boards and do nothing.
  • The venture capitalist tweeted that many SPAC directors are “window dressing.”
  • Charlie Munger, Jeremy Grantham, and other top investors have criticized SPACs.
  • Visit the Business section of Insider for more stories.

Billionaire investor Chris Sacca tweeted on Tuesday that he’s been invited to sit on the boards of several special-purpose acquisition companies (SPACs) – with no expectation that he does any work.

“I’ve been offered a bunch of SPAC board seats,” the former “Shark Tank” star and Lowercase Capital founder said. “The pitch usually goes something like, ‘You’ll get [lots of shares] for just putting your name on it and doing nothing.'”

“While there are some board members actively helping, too many are just window dressing,” Sacca added. “Don’t get distracted.”

SPACs typically aim to secure a stock-market listing then acquire a private company, offering businesses an alternative way to go public than an initial public offering (IPO).

The number of SPACs has exploded in recent months as investors such as Bill Ackman and Chamath Palihapitiya, celebrities including Alex Rodriguez and Colin Kaepernick, and ex-politicians such as Paul Ryan and Gary Cohn have jumped on the trend.

Sacca – an early investor in Uber, Twitter, and Instagram – has shifted his focus towards tackling issues such as climate change and voter suppression in recent years. He isn’t the only high-profile investor to voice concerns about SPACs recently.

Warren Buffett’s business partner, Charlie Munger, dismissed them as “crazy speculation” and evidence of an “irritating bubble” in February.

Similarly, GMO cofounder Jeremy Grantham – who unintentionally made a fortune when one of his investments was acquired by a SPAC last year – slammed them as “a license to rip investors off” and suggested they should be banned.

Read the original article on Business Insider

Legendary investor Jeremy Grantham says the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham said the stock-market bubble would likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like the Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, the veteran investor Jeremy Grantham said on the “Invest Like the Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble would deflate, slammed SPACs, shared some of the insults he’d received for criticizing bitcoin, and predicted that electric vehicles would revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble; this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly, and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now, baby! Get aboard. You don’t understand. You dinosaurs don’t get it.’ Well, the trouble is we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time and then 20% of the time totally freak out one way or the other.”

Read more: The world’s top investment firms pay Rob Arnott for advice. He shares 2 investing ideas that could go down as ‘the trade of the 2020s’ as the world bounces back from COVID-19.

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure, and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7 years old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings or sales for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state-battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the effects of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are, if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

Legendary investor Jeremy Grantham warns the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham warned the stock-market bubble will likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like The Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, veteran investor Jeremy Grantham warned on the “Invest Like The Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble will deflate, slammed SPACs, shared some of the insults he received for criticizing bitcoin, and predicted electric vehicles will revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble, this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice, and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now baby! Get aboard, you don’t understand. You dinosaurs don’t get it.’ Well, the trouble is, we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time, and then 20% of the time, totally freak out one way or the other.”

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7-years-old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings, or sales, for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am, with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the impacts of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

Legendary investor Jeremy Grantham says Biden’s $1.9 trillion stimulus plan will make the stock market bubble even worse

Jeremy Grantham

Legendary investor Jeremy Grantham warned investors during a Bloomberg interview that the $1.9 trillion in federal aid President Joe Biden is seeking from Congress will further inflate the stock market bubble.

The GMO co-founder told Erik Schatzker that he has “no doubt” some of the stimulus aid will end up in the market. He said the “sad truth” about the last stimulus bill passed in 2020 was that it didn’t increase capital spending and didn’t increase real production, but it certainly flowed into stocks. 

The plan that Biden is proposing contains a $1,400 boost to stimulus checks, robust state and local aid, and vaccine-distribution funds. Grantham said that if the package passed is worth $1.9 trillion, it could lead to the dangerous end of the bubble.  

“If it’s as big as they talk about, this would be a very good making of a top for the market, just of the kind that the history books would enjoy,” said Grantham.

“We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust,” he added. 

Read more: A notorious market bear who called the dot-com bubble says he sees ‘fresh deterioration’ in the market indicator that first signaled the 1929 and 1987 crashes – and warns that stocks are ripe for a 70% drop

Grantham has long-warned of the ballooning bubble he sees in the US stock market. In his investor outlook letter in the beginning of January, he detailed how extreme overvaluations, explosive price increases, frenzied issuance, and “hysterically speculative investor behavior” all demonstrate that the stock market is in a bubble that not even the Fed can stop from bursting.

“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years,” Grantham told Bloomberg.

Grantham also said that the combination of fiscal stimulus and emergency Fed programs that helped inflate the bubble could increase inflation.

“If you think you live in a world where output doesn’t matter and you can just create paper, sooner or later you’re going to do the impossible, and that is bring back inflation,” Grantham said. “Interest rates are paper. Credit is paper. Real life is factories and workers and output, and we are not looking at increased output.”

He told investors to seek out stocks outside of US markets, as many other countries haven’t seen the huge bull market the US has. He called emerging markets stocks “handsomely priced.”

“You will not make a handsome 10- or 20-year return from U.S. growth stocks,” said Grantham. “If you could do emerging, low-growth and green, you might get the jackpot.”

Read more: GOLDMAN SACHS: These 22 stocks still haven’t recovered to pre-pandemic levels – and are set to explode amid higher earnings in 2021 as the economy recovers

Read the original article on Business Insider

Legendary investor Jeremy Grantham made an accidental $265 million profit on a SPAC deal after previously criticizing blank-check companies

Jeremy Grantham
  • Jeremy Grantham’s early stake in battery producer QuantumScape has surged following the firm’s merger with a special-purpose acquisition company, but Grantham still isn’t sold on the blank-check IPO trend.
  • Grantham invested $12.5 million into the company seven years ago. That stake now stands at roughly $278 million thanks to a SPAC merger and QuantumScape’s subsequent stock rally.
  • The position is “by accident the single biggest investment I have ever made,” Grantham told the Financial Times.
  • Still, the investor sees SPACs as a “reprehensible instrument, and very very speculative by definition,” largely due to their lack of listing requirements and overall regulation.
  • Visit the Business Insider homepage for more stories.

The very kind of dealmaking that Jeremy Grantham previously deemed “reprehensible” netted the famous investor a $265 million profit.

Grantham, who founded investment management firm GMO and serves as its long-term investment strategist, invested $12.5 million in battery producer QuantumScape seven years ago as one of several stakes in early green-tech companies, according to the Financial Times. The position swelled after Kensington Capital Partners announced plans to merge QuantumScape with a special-purpose acquisition company, or SPAC, in September.

The deal valued QuantumScape at $3.3 billion, and shares traded at more than four times their listing price when the acquisition was completed on November 30. The company’s stock rallied another 31% on Tuesday alone, valuing Grantham’s stake at roughly $278 million.

Yet the legendary investor isn’t convinced Wall Street’s SPAC frenzy will last. The QuantumScape position is “by accident the single biggest investment I have ever made,” Grantham told the FT, partially fueled by the so-called blank-check companies’ lack of regulation.

“It gets around the idea of listing requirements, so it is not a useful tool for a lot of successful companies. But I think it is a reprehensible instrument, and very very speculative by definition,” he added.

Read more: We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Grantham’s profit stands to climb even higher. QuantumScape soared as much as 37% in early Wednesday trading. Should the rally hold into the market close, it would add another $100 million to his total gains. 

SPAC firms raise capital through an initial public offering with the intention of using the cash to acquire a firm and take the merged entity public. The last two years have seen market favorites including Virgin Galactic, DraftKings, and Nikola go public through such deals.

Blank-check IPOs exploded in 2020 as firms looked to take advantage of a surge in participation from retail investors and hopes for an economic recovery. More than $74 billion has been raised across 218 SPAC debuts in 2020, according to data from SPACInsider.com. That compares to just $13.6 billion raised across 59 deals in 2019.

Wall Street’s obsession with the vehicles could be a sign of unsustainable market optimism, Grantham told the FT, rivaling the overwhelming bullishness seen during the 1920s and the late-1990s tech bubble.

Tesla’s meteoric rise through the year has made electric-vehicle SPACs – and any SPAC related to the EV market – particularly popular. QuantumScape lands in that basket. The firm produces solid-state batteries used in electric cars and has backing from industry giant Volkswagen.

Now read more markets coverage from Markets Insider and Business Insider:

DoorDash prices IPO at $102 per share, will raise $3.4 billion

Stocks could stumble in early 2021 as investor sentiment surges past market fundamentals, Goldman Sachs says

Emmet Peppers grew his accounts from $30,000 in 2010 to over $70 million this year. The newly minted hedge fund manager breaks down how he spotted early opportunities in Tesla, Facebook, and the COVID-19 market crash, – and shared one IPO on his radar.

Read the original article on Business Insider