How to Make SPAC Investing Profitable
- Investment Management
- 14.05.2021 08:32 am
SPACs have recently become so popular because they offer opportunities for a higher valuation. SPAC in full is a Special-Purpose Acquisition Company. SPAC refers to a company that has no commercial operations. They are set up to raise capital to acquire existing companies to be merged with private companies.
SPACs are desirable to private companies because major shareholders and founder can sell the companies at a higher percentage than they would otherwise do with an Initial Public Offering(IPO)
Here are some reasons to invest in SPAC.
High numbers of shares sold make it easy for small investors to buy the shares.
SPACs are usually priced at 10% per share, which means that many investors can easily afford it.
The new generation of SPACs focuses on consumer fields and tech, which are more enticing to investors.
If you are looking to investing in SPACs and ensuring they are profitable, these are some of the strategies that you could consider:
Investors should sell their stock before anyone else does when their SPAC momentum turns negative.
An IPO that is starting means that the buying momentum will make the stock higher. SPAC IPOs are a good way of raising plenty of funds. Markets don't usually analyze details of underlying holdings as long as their prices continue to rise.
A lack of moment would suggest that investors buy and hold stock for the long term. A patient investor knows that buying and holding on to stock will be beneficial in the long run as when the company starts operating, it will likely attract new investors, which will lead to shares gaining positive momentum.
Investors could specifically pick companies that are SPAC listings. Investors could hold onto technology companies that are benefitting from positive momentum.
Investors want to pick partners who are greatly involved with SPAC because they know when to buy and sell, as they have been looking into the markets for a while and have a depth of knowledge on how they work.
Trends always tend to raise stock valuations in a particular sector. Investors could hold to SPACs as they ride higher. When the trends fade away, the investors should leave the sector and look for new emerging trends.
Investors should always be wary of signals from stock charts. Moving averages are a slow and reliable indicator for resistance and support levels. Price alerts help know when there is a change in momentum. If a cautious investor notices a fall in stock, they might decide they want to sell to avoid further losses.
According to the money morning article, the best SPACs to invest in include KKR SPAC, Oyster Enterprises, and Simon Property SPAC. Before investing in SPACs, ensure that you have carried out extensive research on them and be ready for the risks that might come with them. There are many opportunities for SPACs, and investors who put in the work will be rewarded generously.