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Want to Buy a SPAC? You Might Be the Patsy

The touted investments tend not to end well for retail investors.

Ruth Saldanha 17 May, 2021 | 8:00
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Chamath Palihapitiya launching IPOA

Back in 1987, Warren Buffett wrote in his annual letter to shareholders, “As they say in poker if you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy." It’s kind of like that with SPACs.

A SPAC or ‘Special Purpose Acquisition Company’ is a company with no real business operations. It exists only to raise capital via an initial public offering, or an IPO, and to then use that capital to buy existing private companies.

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About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor at Morningstar.ca

 
 

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