Dallas Texas-based independent research provider, Vision Research, recently announced the launch of a new SPAC database called Voodoo SPAConomics (VS) to help buy-side clients keep up with the huge volume of SPACs that have already hit the market and are expected to on the next few years.
Vision’s New Product Launch
Launched today, Vision Research’s new VS service will include a few deliverables, including a database of all pre-IPO, active and archived SPACs launched since 2019 (currently about 700 SPACs). The VS database will include almost 80 fields of key SPAC data, which is collected from multiple public sources. The database will be updated regularly on the 1st and 16th of every month.
In addition to the database, clients of the VS service will also receive access to two baskets of SPACs which the analysts at Vision Research have identified as high risk and could be short opportunities. One basket will include 20-25 SPACS that have been announced but not closed, while the second basket will include 20-25 SPACS that have closed. These baskets will consider dilution, sponsor and underwriter quality, redemption ratio, PIPEs, multiples, safe-harbor projections and numerous other data points to identify a group of “unrealistic & ill-advised” SPACs that should be monitored as they could materially underperform the market.
Vision Research has launched the VS database because many of their existing hedge fund clients have expressed concerns about trying to track the explosion in SPACs that have come to market in recent years. In fact, the huge number and market cap of SPACs launched in the 4th Qtr 2020 and 1st Qtr of 2021 suggest that a large number of new deals will de-SPAC in the coming few years – many of which might be of lower quality. The new VS service will help clients efficiently follow the SPAC market and identify short opportunities just prior to or immediately after deals de-SPAC.
Our Take
Founded in 2004, Vision Research is a Dallas-based independent provider of short ideas, fundamental investment research, and consulting services to hedge funds, mutual funds and family offices. Vision covers small, mid and large cap US equities, a selection of non-US stocks, and IPOs. Vision’s investment ideas are sourced from multiple angles, including quantitative screening, qualitative screening through the use key word screens of various types of documents, and daily reading, research and observations.
Vision Research’s launch of its new Voodoo SPAConomics (VS) service is extremely timely given the explosion of the SPAC market over the past few years. As you can see from the above chart, the sheer number of SPACs has risen from approximately 60 deals in 2019 to nearly 420 deals so far in 2021. In fact, SPACs are increasing as a percentage of total IPO funding — rising from 20% of total IPO funding in 2019 to 45% in 2020. Given this astronomical growth, it is surprising that Vision Research is one of the few research firms that are systematically analyzing the SPAC market, particularly given the growing institutional interest SPACs have attracted.
We suspect this will change in the coming years, as the number and market cap of deals that de-SPAC mean there could be a large number of newly formed companies that are risky for a variety of reasons. Hedge funds’ interest in identifying the risky companies from the more stable ones should prompt an increased number of research firms that are interested in following these companies from Pre-IPO to target deal announcement to de-SPAC.