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If you were lucky enough to keep your SPAC (Special Purpose Acquisition Corp) monitor intact through the last 6 months, it’s possible you are surfing another wave of buying in these investment vehicles meant to bring privately operating companies, some established and some in the development stage, public through acquisition. This has become a popular mode of listing, especially if funds available to these companies are tight and they want to get to an exchange quickly. Equally as popular is investor interest is these SPACs and associated warrants.
The Digital World Acquisition Corp. (NASDAQ:DWAC) SPAC, only around since the beginning of October 2021, made headlines in a big way when it announced that it was bringing Donald Trump’s new venture, Truth Social, public through a transaction that valued the company at $875 million. Traders propped the price of the stock to parabolic heights on Friday as it peaked at $175 in mid-day trading, settling at $94, or a $3 billion market capitalization, over 3 times the transaction’s value.
The associated warrants, Digital World Acquisition Corp. (NASDAQ:DWAC), had a run from $0.50 on Wednesday to $79 at its peak on October 22, 2021, or a percent gain of 15,700%.
The aim of the new platform is to compete against the incumbent big tech ecosystem across the board. At the top of the list of offerings is a new social media platform called Truth Social, which has the two-fold goal of challenging big tech competitors while building a platform with the stated purpose of providing an outlet for free speech, a point of contention across party lines.
The app, which will begin a beta launch for invited guests starting in November 2021, will make its full debut in the first quarter of 2022. It’s part of the newly established Trump Media and Technology Group (TMTG) which Trump founded as part of his contribution to the growing phenomenon known as tech lash, which involves a trend to take on big tech oligarchies, such as Facebook, Inc. (NASDAQ:FB), $TWTR and Alphabet Inc. (NASDAQ:GOOG)
The platform appears to be shaping up to look like this:
There are three main components to the newly formed Trump Media and Technology Group. Truth Social is slated to be a direct competitor of Facebook and Twitter. In addition to that, there will be two outlets: TMTG+ will compete with companies like Netflix, Inc. (NASDAQ:NFLX), Walt Disney Company (the) (NYSE:DIS) Plus, and then TMTG News, to compete with CNN and iheartmedia, Inc. (NASDAQ:IHRT).
Finally, as seen above, there’s a long term “tech stack” opportunity that will take on Amazon.com, Inc. (NASDAQ:AMZN) Web Services, Google Cloud and similar enterprises. All in all, it is a multi billion dollar challenge to big tech.
So, why is this important? If you are into SPACs, It illustrates the need to track those that are in hot industries, and especially if the capital structures of the non-operating companies are favorable. In the event a deal is inked, low outstanding share counts and floats could send shares soaring. Even when you don’t know the industry that a shell corporation is looking to enter, keeping the list of SPACs near and dear could lend to an historic day of portfolio gains as it did for so many this past week. This means, setting alerts, reading filings, watching price action, and staying ahead of trends…and most importantly, not getting lazy in your SPAC research when the sector is out of favor, as it had been for several months.
Large investment firms like Saba Capital Management hold 100’s of SPACs in their portfolios, no doubt hoping to catch lightning in a bottle. Saba certainly did this time with DWAC, as did our friend, @hkuppy, founder of adventuresincapitalism.com, who also tracks event-driven strategies at http://KEDM.COM. (Check out the Important Tweets section below).
SPACs have been hitting our new highs screens internally, and we know that it’s only a matter before another opportunity like DWAC/DWACW presents itself. As you know, most of our investment strategies at Geoinvesting are based on long term fundamental undercurrents. However, we understand that there are opportunities to make money in the short term when certain opportunities arise. We admit that we need to leave our egos at home and at least consider them from time to time.
Like this post if you want us to put some more emphasis on the research and tracking of SPACs. It comes in waves, so let’s catch the next one.
~Maj Soueidan, Co-founder GeoInvesting
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Two incredibly important pieces of information you should know before purchasing a stock.
1. How many shares do directors hold and how did the acquire them?
2. How much do directors get paid?
The answer to these two questions identifies if your interests are aligned with theirs.
— TheGladiator (@TheGladiatorHC) October 20, 2021
SPACs and lower tier microcaps are creeping their way back onto new high lists. An indication that, after a 6 month hiatus, broad reckless “risk on” sentiment might be coming back into vogue in the microcap space. Not into low quality, but rising tides lift all boats.
— Maj Soueidan (@majgeoinvesting) October 22, 2021
Kuppy on DWAC:
Live shot of my portfolio…pic.twitter.com/kWNLL5C12Z
— Kuppy (@hkuppy) October 21, 2021
In light of Konatel Inc (OTC:KTEL)’s recent move to all time new highs, we’d like to revisit a conversation we had with the company’s CEO, Sean McEwen. We already liked the company and felt confident that he would be able to effectively tell his story to a wider investor audience through our Avoiding The Crowd Podcast. The segment was originally posted to GeoInvesting here as part of a group of stock pitches from peers who appeared on the Podcast. Here it is again!
Recommended Reading From Around the Web
Just like in last weeks GEOWIRE when we connected with a bullish Seeking Alpha writeup on Tapinator, TAPM, one of our top performing picks in 2021, last week we found a Twitter thread by an investor we have come to respect, discussing his multi-bagger find in FULO.
This led us down a path to find a bit of a risk assessment on Fullnet Communications Inc (OTC:FULO) written back in June of 2021 by Elementary Value. Fullnet Communications Inc., an integrated communications provider, through its subsidiaries provides high quality, Internet access, web hosting, local telephone service, equipment colocation, customized live help desk outsourcing services, mass notification services using text messages and automated telephone calls, as well as advanced voice and data solutions.
FULO is a stock that has been doing rather well for us. While the title of the article might denote a dire warning to stay away from the stock, “FullNet Communications Inc (FULO) – Buyer Beware“, the content conveys more of a mixed bag of analysis, some of which appears to absolve FULO from some of the red flags that had been floating around at the time. Namely:
“After a bit of digging about the only reasons I found to justify this [skull and bones on OTCmarkets.com] is a late filing of the 2016 and 2019 10-Ks and some issues with an old auditor back in 2013. You can read about it here.
I’m no accountant or auditing expert but if I’m reading the linked document right it seems to suggest FULO were not at fault and it was sloppy auditing practices from Hood & Associates since they screwed up with two other companies too. FULO kicked them to the curb after that debacle and got a new auditor. See here.
Maybe I missed something else here so do your own due diligence.”
It looks likes he author was ahead of the curve on this one since FULO’s share price was $0.035 at the time of the analysis.
Today, the skull and bones is gone and the stock sports a verified profile as of October 2021. It’s been climbing to new highs, and since our initial entry into FULO on September 7, 2021 at $0.60, we are enjoying a 83.3% return (as of 10/29/2021) and the percent gain peaked at 191.7%.
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