Hyliion – Another Electric Semi Truck IPO

One way new investment opportunities manifest themselves is through initial public offerings (IPOs). This is an event where a company decides to sell some of their shares to the general public and institutional investors who will commit to purchasing shares. During this process, the company selling shares will typically go on a “roadshow” where they present their offering to potential investors. As part of the IPO process, an S-1 filing is made with the regulatory authorities which describes the offering in detail.

Lately, we’ve been seeing some companies bring their shares to the public using a different method. It’s called a “blank check company”. You may also hear this referred to as a “SPecial Acquisition Company” or SPAC. The general idea of a blank check company or SPAC is for investors to literally sign over a blank check to someone who then decides what to invest the money in prior to the whole vetting process taking place. Essentially, investors are putting all their faith in the person running the shell. It’s kind of like the reverse mergers you see on the OTC market, except that the shell is traded on a major exchange with large investment banks participating.

In our limited experience with SPACs, we’ve noticed they tend to have a problem with irrational exuberance. For example, both