Tuesday, December 29, 2020

As we wind down 2020, we thought it might be interesting to poke around with our latest obsession: Special Purpose Acquisition Companies (SPACs). We’ve written about these vehicles before. At the end of November, we discovered how many there were and did an introductory piece on the topic.

Today, we will show our users how to do some sleuthing of their own, and try to learn something together.

First, we come up with our list of SPACs. To do that, visit the Multi-company page on Calcbench and click on the choose companies button. You will get a form that opens up and you can select the entire SIC group by entering “6770” like the picture below.

Next, pick your metrics. We chose assets and cash. Our naïve assumption was that all (or most) of the assets of the SPACs were “dry powder” and would be ready to deploy at a moments notice. We discovered that our assumption was inaccurate. As you can see in the figure below, most SPACs’ assets are something other than cash.

Since we now show about 2-3 percent of assets of the SPACS in cash, we wondered (out loud) about what was going on.  

Hint: Read the footnotes!

We created a smaller peer group and went to the Interactive Disclosures page on Calcbench, where we found two interesting cases. First, Pershing Square has a SPAC. For those who know, Pershing Square is the hedge fund run by famed financier Bill Ackman. This SPAC was the biggest one that we found (measured by assets), so we thought it worth examining. It turns out that most of the assets are in a trust that, while technically not cash, are liquid. 

 See the Accounting policy below:

Next, we looked at another SPAC further down the list, AgroFresh Solutions. Maybe it has a trust too? 

No, but look at what we did find. AgroFresh has 75 percent of its assets in intangibles

Looking a bit deeper, the footnote for Intangibles and Goodwill tells you that it sits mostly in Developed Technology.

OK, but exactly what developed technology is in that line item? You have to go back to the 2015 10-K to find out.

Hopefully you found this tutorial helpful. Calcbench looks forward to seeing more of our readers in 2021, so to all of you, Happy New Year!

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