Hey There Income Hunters,
How would you like to get behind the wheel of a Formula One race car?
Well, I can get you close.
I’m revved up about a special purpose acquisition company (SPAC) that offers unique benefits for investors …
And the Formula One Group is actually where the investors shares are held.
I was pumped when I found this SPAC because of some personal history with Formula One …
When I was in London, I was really fortunate to be invited to the 2000 Monaco Grand Prix. The atmosphere was Super Bowl-esque and, of course, I was with a fun group of Brits.
They were going nuts with British driver Dave Coulthard close to lead the whole race and he pulled out the victory at the end.
Many pints were had at the afterparty. These guys really loosened up outside of work.
Anyway, back to the matter at hand …
Most SPACs are issued by individuals, but the issuer in this instance is Liberty Media Corporation, via the Liberty Media Acquisition Corporation (LMAC). Through the years, Liberty Media has made a number of awesome acquisitions, including SiriusXM Group and Formula One Group …
And the Liberty Media SPAC has the best setup for investors that I have seen …
Here’s a quick review of the SPAC transaction….
- SPACs are a shell, or blank check, companies set up to raise money via IPO in order to acquire another company.
- Interested shareholders have an opportunity to invest in a SPAC IPO at $10 a share.
- A fractional amount of a warrant is offered by LMAC. A warrant is the right, but not the obligation, to buy stock within a certain period of time. It’s included as an incentive to tie up your money.
- Investors can also redeem their shares for the initial $10 IPO price if they don’t like the deal …
Strong Position to Make This Play
American billionaire John Malone is the chairman and largest voting shareholder of Liberty Media. Great deal flow is available to John and that is a major plus for investing in this SPAC …
Here are two other signs of how strong a partner Liberty is:
- Only ¼ share of the warrant is available to purchase additional shares at $11.50 if you choose to do so. The standard for a SPAC is ½ of a warrant as added incentive. However, with an issuer of Liberty’s value onboard, greater incentive for investors is not needed.
- Fewer warrants are also less dilutive to the outstanding shares, which puts Liberty in a stronger position when negotiating with potential partners …
If you are able to pick up LMAC, which trades on the CBOE BZX equities exchange, at $10.15, your risk is limited to $.15 a share. There is limited risk in a SPAC deal due to your ability to redeem for the initial $10 IPO price either prior to the sponsor closing a deal or if the predetermined deadline to find a deal expires.
In Steady Hands with Formula One Group
Sponsors are normally individuals who keep the upside returns for themselves. Here, John Malone will have his founder’s interest held by the Formula One Group.
What makes LMAC a SPAC worth holding longer-term is the fact that investors share in the economics of the founder’s shares since Formula One Group is designated as the issuer and founder…
Bring It Home
It is so refreshing to find a management that puts the shareholders first. John Malone, by most estimates, is the largest private landowner in the US…
John, is also a philanthropist and is very generous with his time and money …
I’m all in on this one.
Gentlemen, start your engines!
Have a great week and as always…