We spend quite a bit of time discussing how to analyze businesses, and for good reason. But what about stocks that don’t have any underlying business?
We’re talking about the recent trend of special-purpose acquisition companies, or SPACs. These companies are set up to raise capital, with the goal of using that capital to take a company public. The problem is, how can you evaluate a SPAC as a potential investment before a merger agreement is announced?
While investing in a predeal SPAC is certainly a speculative endeavor, there are some ways to narrow down the field to those that make the most sense as investments for you. In this Jan. 21 Fool Live video clip, Fool.com contributor and SPAC investor Matt Frankel, CFP, walks investors through the important points in any SPAC’s regulatory filings, along with fellow contributor Brian Withers.