For SAVS, a characteristic seems to determine the winning investors of the losers

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For PSPC investors keen to pick winners in the cooling market, a feature of blank check agreements has led to consistent outperformance.

According to Wolfe Research, the biggest deciding factor in a SPAC’s post-merger stock market performance was the sponsor’s related experience, or lack thereof. The company found that the SAVS with “experienced operators”, that is, the CEO or president of the sponsor of the blank check had direct operational experience in the sector of the acquired company, recorded on average big returns.

According to Wolfe Research, stocks of deals with senior leaders tend to far outperform those without for a month, three months, six months, and a year after mergers close. A year later, PSPCs with experienced operators saw an average increase of 73%, while those without an industry veteran suffered an average loss of 14%, the company said.

“We found that the strongest differentiating characteristic of De-SPAC stock performance was the presence / absence of an experienced trader,” said Chris Senyek of Wolfe Research in a note.

After a record first quarter, the PSPC market slowed as regulatory pressure increased and supply reached unsustainable levels. PSPC’s emissions fell 87% in the second quarter to a total of $ 13 billion, according to data from Barclays. Granted, PSPC’s current pipeline of pending IPOs remains high at $ 71 billion, according to data from Barclays.

SAVS, or special purpose acquisition companies, raise capital as part of an initial public offering and use the liquidity to merge with a private company and take it to the stock market, generally within a period of two years.

Faced with the pressure of deadlines in a volatile market, some SPACs have had to settle for less ideal targets and, in some cases, throw their entire plan out the window. CNBC previously reported that a leisure SPAC merged with a biotech company, while a cannabis blank check company ended up making a deal with a space company.

The explosive popularity of PSPCs last year also drew a large number of new celebrities to Wall Street to jump on the bandwagon. The Securities and Exchange Commission previously issued a warning against these prominent-backed deals, urging investors to think twice before taking the plunge.

Many SPAC stocks wiped out their 2021 rally as the market cooled. The exclusive CNBC SPAC Post Deal index, which includes the largest PSPCs that have announced a goal or those that have already completed a PSPC merger in the past two years, is roughly stable over the year as of Friday. . At its peak in 2021, the index was up double digits.

– CNBC’s Nate Rattner and MIchael Bloom contributed to this story.