EXCLUSIVE: New DeSPAC ETFs Keep It Fresh With Monthly Rebalancing, Short Selling Of SPACs

EXCLUSIVE: New DeSPAC ETFs Keep It Fresh With Monthly Rebalancing, Short Selling Of SPACs

Two new SPAC ETFs launched on Wednesday that offer investors both long and short exposure to companies that have de-SPAC’d and completed mergers.

The New SPACs: The De-SPAC ETF DSPC and The Short De-SPAC ETF SOGU are the first ETFs to offer pure-play exposure to a basket of de-SPAC’d stocks.

The ETFs offer a “totally and completely different” approach to SPAC investing, Tuttle Capital Management CEO and Chief Investment Officer Matthew Tuttle told Benzinga.

ETFs on the market that offer exposure to companies that have completed a SPAC merger come in baskets that include pre-merger companies as well, typically with a 60% weighting to this type of asset.

“We don’t think they belong together in a portfolio,” Tuttle said of pre-merger and de-SPAC’d companies.

The Short De-SPAC ETF allows investors the opportunity to bet against former SPACs.

“The other thing we found was a real desire to short SPACs.”

Related Link: Exclusive: New SPAC ETF Creator On SPACs, Management Teams, Top Holdings 

The Holdings: The ETFs are based on an index that includes 25 of the largest former SPACs by market capitalization. The index is rebalanced monthly and includes companies up to 12 months after merger completion. Holdings are held at equal weighting.

“We want to keep it fresh.”

Holdings in the ETF include QuantumScape Corp QS, Lordstown Motors RIDE, ChargePoint Holdings CHPT, Hyliion Holdings HYLN, Fisker Inc FSR, Desktop Metal DM, Aeva Technologies AEVA, MP Materials Corp MP, Velodyne Lidar VLDR, Hims & Hers Health HIMS, Butterfly Network Inc BFLY, Luminar Technologies LAZR, AppHarvest Inc APPH, Paysafe PSFE, Canoo Inc GOEV, E2open Parent Holdings ETWO, Nikola Corp NKLA, Genius Sports GENI, Opendoor Technologies OPEN, Clover Health Investments CLOV, Open Lending Corp LPRO, Danimer Scientific Inc DNMR, Skillz Inc SKLZ, Porch Group PRCH and BTRS Holdings BTRS.

The big reason for using an index and handpicking the 25 has to do with accessibility to stocks that can easily be shorted, Tuttle said.

Upside for the components in the index could be found with inclusion in future Russell Indexes. Tuttle said none of the holdings in the index are in any Russell Indexes. 

What’s Next For SPACS: Along with the new ETFs, Tuttle helped launch the SPAC and New Issue ETF SPCX previously, offering investors an actively managed ETF with exposure to SPACs.

Back in February, Tuttle had a hard time getting allocations of new SPAC IPOs due to demand.

“Now there are no IPOs and if there are, I don’t want them — why buy at $10 when I can buy at $9.80?” Tuttle said.

The reality of the offerings is they are not seeing spikes in their price and funds like Tuttle’s can buy them cheaper when they open for public trading.

Tuttle said the focus still is on “buying strong quality management teams” along with buying under the $10 level.

Disclosure: Author is long shares CHPT, FSR and HYLN. 

Posted In: Matthew TuttleSPACSPACsTuttle Tactical ManagementM&ASpecialty ETFsSmall CapTop StoriesExclusivesInterviewETFs