Thread by @JulianKlymochko

3 SPAC IPOs today, with all 3 featuring "anchor investors"

"Anchor investors" sound like something good, but they're not. SPACs with anchor investors should be avoided like the plague

They are of the lowest quality and face the highest risk of liquidation

1/

Anchor investors typically take down the entire issue, in return they get 25% of the sponsor's free shares

Here's why these SPACs should be avoided:

A) They come to the market on non-market terms. These deals only get done due to free promote "bribe".

2/

B) If sponsor fails to get market support for their IPO , what confidence do you have they'll execute on a business combination? Failure from the jump

C) Anchor investors immediately plow out of the stock, leading to lowest SPAC price. PIPEs are hard, esp when SPAC is $9.60

3/

D) Sponsor give-up to anchor investors makes for far less flexibility on the back-end. Sponsors typically need to give up a lot of their free shares to consummate a business combination. These SPACs are negotiating with their hands tied, and have a tremendous disadvantage

4/