WL Ross Holdings

DETTA INLÄGG ÄR ETT UTDRAG UR KVARTALSBREVET JAG SKICKADE TILL PANDIUMS ANDELSÄGARE 2 FEBRUARI 2015.

WL Ross Holdings (WLRH) is a Special Purpose Acquisition Company (SPAC). A SPAC is a publicly traded company that raises money in order to pursue the acquisition of a company (that has not yet been identified). The funds are kept in a bank account until an acquisition target has been found.

In general I do not find SPACs interesting. The reason is that expenses and fees often run high and the acquisitions are not seldom value destroying. But WLRH differs from most SPACs in two important ways. First, it is managed by Wilbur Ross, probably the most successful bankruptcy and distressed asset investor there is. During his long career he has proven to be both competent and honest. Second, once WLRH has found a company to acquire the shareholders will get the option to either participate in the transaction or to be redeemed at $10.00 per share. Since the Fund paid less then $10.00 it means that if we decide to not participate we will get interest on our money. So if Wilbur finds a good investment we get to participate in the potential upside and if he does not or we do not like the target we can get our money back with interest. So, it is heads we win, tails we do not loose.