The New Blind Pools
A fairly scathing article by Eric Savitz in Barron's this morning on SPACs: The New Blind Pools:
"It's the return of the blind pool, gussied up with a nicer name -- the special-purpose acquisition company, or SPAC. Whatever you call them, the game is pretty simple: You buy shares of a company with no operations, and then that company takes the cash and goes shopping for something to buy.
Pure genius! No need to worry about investors finding holes in the business model, since the prospectuses for these deals can truthfully offer absolutely no substantial information about operations. The deals are sold on the strength of management, the allure of vague plans to invest in hot sectors like China, oil or offshore outsourcing, and a set of strictures designed to protect investors from the kind of unscrupulous operators that gave blind pools a bad name in the early 1980s . . .
Still, despite the safeguards put into place, SPAC investors are voluntarily flying blind; they don't know what they're buying. SPACs might provide a chance at a big score for their officers, and make nice playthings for hedge-fund managers. But for retail investors, they're just Wall Street's latest casinos. Enter if you're a gambler, not an investor."
Source:
The New Blind Pools
By ERIC J. SAVITZ
Barron's MONDAY, DECEMBER 12, 2005
http://online.barrons.com/article/SB113417937240719118.html
Sunday, December 11, 2005 | 11:58 AM | Permalink
| Comments (4)
| TrackBack (0)
add to de.li.cious |
digg this! |
add to technorati |
email this post

TrackBack
TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8341c52a953ef00d8346559dd53ef
Listed below are links to weblogs that reference The New Blind Pools:
Comments
Where it says "80% of shareholders" does that mean 80% of shareholders, or holders of 80% of the shares?
Posted by: Jon H | Dec 11, 2005 3:08:58 PM
The comments to this entry are closed.