Chamath Palihapitiya is the poster-child for the SPAC, or special purpose acquisition company, phase that was a passing fad on Wall Street in 2020 and 2021.
SPACs are basically empty companies that seek to buy existing businesses, and shareholders in them get a vote after SPACs find a target on whether to accept the deal or get refunded the $10 per share par value. SPAC shareholders also get refunded if no deal can be found.
Palihapitiya was dubbed the SPAC king, for the voluminous deals the high-profile media personality brought to market. He did quite well, personally — roughly doubling the $750 million he put in, according to New York Times calculations. And his seed money, for Virgin Galactic
SPCE,
and Clover Health
CLOV,
was in part borrowed from the fallen Credit Suisse, the Financial Times reported, citing public filing.
Investors in his SPACs did not do so well. This table shows that the average SPAC he sponsored since inception has lost about half his value.
None of this is new, but somehow in response to one of his comments about the markets there was a discussion of his performance. Here’s a good recap, the highlights being him telling investors to “stop being a victim” and saying, “I’m in the arena trying stuff.”
It should be noted that when Palihapitiya did sell SPACs he sponsored, he did not tell other investors to do likewise.
From the archive: Chamath Palihapitiya slams media for not uncovering FTX problems ahead of collapse
