Market Overview

Kyle Bass-Led Hedge Fund Adds 9% Stake In EV Charging SPAC

Kyle Bass-Led Hedge Fund Adds 9% Stake In EV Charging SPAC

Shares of the special purpose acquisition company Switchback Energy Acquisition Corporation (NYSE: SBE) moved higher Thursday on news of an ownership stake from a hedge fund.

What Happened: Hayman Capital Management announced a 9.1% stake in Switchback Energy Acquisition Corporation, which is set to merge with ChargePoint.

Kyle Bass, Hayman Capital's founder and CIO, tweeted out an announcement of the deal. 

Benzinga reached out to Bass on why the fund added the stake in the SPAC.

“Electric vehicles are projected to be nearly 10% of new vehicles sold in 2025 and up to 29% of new vehicles sold in 2030,” he said.

“As adoption of electric vehicles increase, sales of ChargePoint’s already dominant hardware and software will likely accelerate faster than a Tesla at ludicrous speed.”

Why It’s Important: SPAC plays have generally not been popular with hedge funds or ETFs until after a deal is completed.

Ark Next Generation (NYSE: ARKW), which is one of the best-performing ETFs of 2020, recently added a stake in Social Capital Hedosophia II (NYSE: IPOB).

That SPAC is set to merge with Opendoor. Shares of Social Capital Hedosophia II have been rising since investors became aware the ETF took a position.

What's Next: The move here by Bass could signal a strong belief in the deal being completed and shares being undervalued going into the merger.

“Investors in Silicon Valley are consumed by what the future holds for driving and cars in America. One of the biggest winners in the electric vehicle space is already here. Its name is ChargePoint,” Bass told Benzinga.

California Gov. Gavin Newsom is pushing to ban the sale of new gas-powered cars in the state by 2035. His push includes an increase in the number of electric vehicle charging stations across the state.

More state initiatives to grow their charging infrastructure could be a big win for a company like ChargePoint, which will become a publicly traded pure play on the industry when the merger is complete.

SBE Price Action: Shares of Switchback Energy closed up 7% on Thursday to $14.73. The stock ended Friday's session down 0.41% at $14.66. 

Disclosure: The author is long shares of SBE, IPOB. 

Photo courtesy of ChargePoint. 


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