Inside Wall Street's New SPAC Turducken Craze

Bloomberg

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00:00The way that the visual does it perfectly, I would say, so basically SPACs or blank checks,

00:05they partner up with a private company, take the private company public.

00:08But in this new iteration, in the era that we saw of the digital asset treasury kind of taking off,

00:14you take the crypto and you put it in the treasury company,

00:18and then you take that company and you merge it with the SPAC.

00:20So I think that crypto is your chicken, treasury company is your duck,

00:26and then the SPAC is your turkey.

00:27I mean, to me, it seems like a greater fool theory cubed, right?

00:33Because the only thing holding up the price of Bitcoin is the fact that you can later sell it on to the greater fool.

00:39The same is true, really, of treasury companies.

00:41I mean, what's the growth in treasury companies, right?

00:46And then a SPAC is just another version of that.

00:49Well, the main critique of these stats is that your whole process to that point is

00:54you're going to be able to sell shares or convertible debt at a premium.

00:57As long as you trade above net asset value, something that Michael Saylor had kind of latched onto

01:01and was executing quite well, that's the whole vision, and that keeps driving up Bitcoin.

01:05Does it drive a circle?

01:06I let other people debate that.

01:08But the thing with a SPAC merging with a DAT is that not only do you have kind of the issues of the DAT

01:14hoping that it trades at a premium, you also have the founder shares coming from the SPAC.

01:19By the way, why do you say merging?

01:20From an old school Bloomberg journalism perspective, isn't the SPAC buying the DAT?

01:26See, people say that, and I think it's a little bit of a misinterpretation

01:30because that implies that the SPAC is outright taking over the DAT, whereas it's only getting a portion of it.

01:37So when you look at the Cantor deal, only about 3% to 4% of that ultimate company is going to be held by the SPAC.

01:43So it's really a vehicle to take it public, but it's not taking over in the sense that it's majority held.

01:49By the way, did we show the stock of the Cantor SPAC?

01:53Because it's amazing how it just jumps up, right, when they make the announcement,

01:59and then I guess the smarter investors sell out over time.

02:02You're kind of regression to the mean.

02:03Leaving the retail investors holding the bag.

02:06Is that the case?

02:07Talk about greater fool theory.

02:08This is essentially a trading vehicle.

02:09And if you talk to most fundamental investors, they'd say, okay, well, if you're buying maybe a SPAC

02:15that's taking a quantum computing company public, okay, maybe it's worth $11.

02:19But when it trades, I don't know, $50, you're kind of just using it as a trading sardine, as they said back in the day.

02:25Just quickly, Bailey, though, if we keep getting weeks like last week, surely this isn't sustainable.

02:29I don't think it's sustainable.

02:30We will get the Cantor Fitzgerald vote December 3rd.

02:33We will get the Columbus Circle vote December 3rd.

02:36So we will actually see a couple of these companies cross this finish line from the SPAC finish line.

02:40So it'll be interesting to see if they immediately trade below NAV.

02:43Do they trade down to NAV?

02:44But for all intents and purposes, I can promise you Cantor right now trades at about $14.

02:49There's not $14 worth of Bitcoin in that company.

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