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An Ark Invest webinar was held on April 13. Among the topics discussed by CEO Cathie Wood and the team were SPACs.
Caution On SPACs: Ark Invest and Cathie Wood have two points of view when it comes to SPACs: "We share optimism and concern."
Wood said the compensation structure of SPACs deprives individual investors and rewards the sponsors of SPACs.
The large number of SPACs and early-stage companies going public is another cautionary item. The venture capital model of getting two out of 10 deals right is good for VC but not how equity markets operate, according to Wood.
“We think there will be some accidents in the SPAC market," she said.
Wood said some of the companies going public via SPAC could fail outright.
Related Link: 10 SPACs Owned By Cathie Wood’s Ark Funds
Research Is Paramount: Wood said there are too many good opportunities in the SPAC investment segment and there are some great companies going public via this option though.
“We’ve known many of the companies that have been acquired by SPACs,” Wood said, adding that they watched the companies prior to them going public. Wood mentioned 3D printing and drones specifically when discussing some areas that have had good SPAC deals.
“Research is paramount," she said.
Ark Invest has invested in several SPACs over the last 12 months. Among the 3D printing and drone companies owned by the ETF company are Jaws Spitfire Acquisition Corp (NYSE:SPFR), One (NYSE:AONE), Desktop Metal Inc (NYSE:DM), Reinvent Technology Partners (NYSE:RTP), Experience Investment Corp (NASDAQ:EXPC) and Atlas Crest Investment Corp (NYSE:ACIC).
