Bill Ackman returns $4 billion to investors after failing to conclude a SPAC merger deal, according to a released July 11 letter to shareholders.
“We are returning our $4 billion of capital in trust to shareholders as we have been unable to consummate a transaction that both meets our investment criteria and is executable,” wrote Bill Ackman.
At the height of the pandemic lockdowns, July 2020, Pershing Square Tontine Holdings (PSTH) raised a $4 billion IPO on the New York Stock Exchange.
“We are returning our $4 billion of capital in trust to shareholders as we have been unable to consummate a transaction that both meets our investment criteria and is executable”
BILL ACKMAN
“We designed PSTH to be the most investor and merger-friendly SPAC at a time when we believed the COVID-19 pandemic would continue to disrupt capital markets providing PSTH with an opportunity to merge with and take public a large capitalization private company that met our investment criteria for business quality, durable growth, and an attractive valuation,” wrote Bill Ackman.
So PSTH raised capital intending to complete mergers within a timeframe, these are known as Special Purpose Acquisitions companies, SPACs.
In other words, the predator, the acquiring company, has a blank cheque to merge or acquire target companies of interest.
SPAC time frame is usually 18 and 24 months.
If a SPAC cannot merge during the allotted time, it liquidates, and all funds are returned to investors.
Bill Ackman returns $4 billion to investors, indicating that the billionaire investor sees no attractive investment opportunities in an economy in a recession and now flirting with a depression
The latest July’s red hot US CPI posting 9.1% shows no signs of cooling. Meanwhile, with consumer confidence at a 50-year low and business investments shelved, the world’s largest economy is decelerating at an alarming rate. Fed chair Powell has two big worries now, runaway inflation and an economy flirting with a depression.
“We designed PSTH to be the most investor and merger-friendly SPAC at a time when we believed the COVID-19 pandemic would continue to disrupt capital markets”
BILL ACKMAN
So monetary policymakers can inflate the economy with expansionary monetary policy. Alternatively, they can deflate the economy with contractionary monetary policy.
There is no magic policy tool that can simultaneously keep investments flowing and inflation under control.
“In 2022 Approximately $9.1 trillion has been slashed off portfolios, and pension funds” – Wealth Training Company
We envisage the Fed adopting a “stop-go” monetary policy, which alternates between fighting high unemployment and high inflation as the likely policy adoption
But until investors get a clear sign of where Fed policy is heading with no signs of red hot inflation cooling, investors have been dealt “Univestable Markets’ ‘, as written in a piece in early May, before the cryptocurrencies crash. Make no mistake about it. If the central banks keep tightening in a recession, the economy enters a great depression.
Bill Ackman returns $4 billion to investors is a red flag that these markets are uninvestable
In 2022 Approximately $9.1 trillion has been slashed off portfolios, and pension funds, if we combine $7 trillion of wealth slashed off stocks and $2.1 trillion on cryptocurrencies since their peak in 2022.
Perhaps the difference between the most significant silent crash of everything in 2022, which is already worse than the Dotcom crash of 1999, where stocks lost $5 trillion in market capitalization since the peak, is that central banks were loosening, today they are tightening in a recession. Capitalism withers on the vine without investments.
See Bill Ackman returns $4 billion to investors here.
