Hedge funds make millions as shares in Trump media Spac jump


A group of 11 hedge funds, including DE Shaw and Saba Capital, made millions of dollars in potential profits a day after a 421% rise in special-purpose acquisition companies that merged with Donald Trump’s new social media group on Thursday. I got it.

Former US President of the Week Release A social media outlet called Truth Social aimed at competing with things like Facebook and Twitter, creating a platform for his right-wing supporters ahead of his potential inauguration in 2024. ..

Spac shares rose from $ 9.96 to $ 51.90. They eventually closed at $ 45.50, up 357 percent compared to the previous day.

In September, the hedge fund purchased an initial public offering. Spac It was named Digital World Acquisition Corporation, promoted by Patrick Orlando, a sponsor of three other Spacs that previously traded derivatives at BT Capital Markets and Deutsche Bank.

Hedge fund investors own almost all of Digital World’s $ 293 million IPO, listing 25 million units on the IPO, and a generous incentive for investors to participate in less-accepted transactions. Provided. Spac IPO investors have no way of knowing which company will eventually merge and go public.

Transactions with Playing cards I’m making money. The 25 million units from Thursday’s IPO were sometimes worth more than $ 1 billion. Special incentives also boosted profits.

Digital World has granted 150,000 sponsored shares to each hedge fund at a price of $ 0.0029 per share from Orlando and the so-called Promote of his team. It cannot be sold until the merger with Trump Media is complete. At the afternoon high of $ 51.90, the $ 435 share price was worth $ 7.7 million.

Since Thursday’s opening bell, Digital World has been one of the most traded stocks in the world, recording nearly 300 million shares, or $ 5 billion, by lunchtime.

Julian Klymochko, a Spac expert and founder of the investment firm Accelerate Financial Technologies, said:

“There are many bumps embedded in Spac products,” David Puritz of Shaolin Capital Management, a $ 1.1 billion fund that owns just under 10% of Digital World’s stake, told the Financial Times. However, the transaction minimized the possibility of loss.

“Good things can happen quickly if you partner with the right sponsor team that has a clear vision of your goals,” Puritz added.

A large investor in Spac’s IPO consortium called Spac one of the best deals of his career and said he was selling off his position. Hedge funds typically sell Spac units if the stock soars after the transaction is announced. DE Shaw declined to comment, but other hedge funds listed as investors did not respond to the request for comment.

Nonetheless, some investors who missed the IPO sniffed the opportunity.

Craig Samuels, a San Diego-based investor who has been buying Spacs for over a decade, said that buying a Spac on Thursday morning “is at the casino, past the craps table and throwing away chips.” He said it was similar to that.

According to Samuels, the appeal is that there is virtually no way to evaluate Trump’s media business, which did not provide financial forecasts in its presentations to investors.

“Who knows,” Samuels said. “We’ve seen AMC Entertainment go $ 70 and GameStop $ 500 … This is an optimistic play for traders who have the momentum to manage their stocks using Trump’s cult status. “

Samuels added: “Is it worth $ 5 billion today? I doubt. But it’s hard to quantify the value of the Trump brand.”

Hedge funds make millions as shares in Trump media Spac jump Source link Hedge funds make millions as shares in Trump media Spac jump

The post Hedge funds make millions as shares in Trump media Spac jump appeared first on California News Times.

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