Jeff Smith's Starboard Value piles into SPACs even as blank-check market falls apart

Published Mon, May 16 20225:55 PM EDT

Jeff Smith's Starboard Value piled into SPACs in the first quarter, even as the blank-check market started to fall apart. The hedge fund manager added at least 30 new SPACs in the first quarter, according to a regulatory filing. Most of these new positions were worth less than $10 million as of the end of March. The flurry of new SPAC investments came even as the once red-hot market pulled back significantly. These blank-check companies are often speculative stocks with little earnings, and they have taken a beating amid rising rates and regulatory crackdown. SPACs, or special purpose acquisition companies, raise capital in an initial public offering and use the cash to merge with a private company and take it public, usually within two years. The Securities and Exchange Commission in March introduced a host of new rules for SPACs that would mark one of the broadest attempts to date at cracking down on blank check companies. The proposed rules would amend safe harbor rules and leave SPACs open to investor lawsuits for excessively rosy business forecasts. The CNBC SPAC Post Deal Index , which is made up of SPACs that have completed their mergers and taken their target companies public, has tumbled more than 40% year to date. In July 2021, Smith sponsored a $300 million blank-check deal himself. Starboard Value Acquisition Corp. completed its business combination with Cyxtera Technologies , a data center colocation and interconnection services company. The stock is up about 1.2% in 2022. Here are just some of the SPACs Smith added in the first quarter: 10x Capital Venture Acq. III A SPAC I Acquisition Corp. Aetherium Acquisition Corp. Ahren Acquisition Corp. ALSP Orchid Acquisition Corp. Altimeter Growth Corp. 2 Andretti Acquisition Corp. AP Acquisition Corp. Apeiron Capital Invest Corp. APX Acquisition Corp. Ares Acquisition Corp. Ascendant Digital Acq. Corp. I Atlantic Coastal Acquisition Corp. Banyan Acquisition Corp. Battery Future Acquisition Beard Energy Transition Acq. Bioplus Acquisition Corp. Blockchain Coinvestors Acq. Corp. Bullpen Parlay Acquisition Burtech Acquisition Corp. C5 Acquisition Corp. Cactus Acquisition Corp. 1 Capital Works Emerging Markets Acq. Cartica Acquisition Corp. Other than SPACs, Starboard added to its bet on GoDaddy in the first quarter after taking a 6.5% stake in the web services company in December. Smith has remained a prolific activist investor, calling for changes in Humana, Kohl's, Mercury Systems and others. Starboard Value manages about $6.2 billion in assets, according to filings through the first quarter of 2020. Smith spun the New York-based hedge fund out of investment firm Ramius in 2011.