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Hey friends, how are you doing? was wondering what i’ll do with my amc and gme money after I sold. Wanted to buy a company i like. I like Universal Music Group. Bought 690 shares. As always I disclose my trades first on twitter because it’s faster and I believe in transparency and do not hide behind a pay wall.
Look this is not a classic Chicken Genius Innovative / Change the world / 10X play. This is a boomer play. So don’t expect much. Why do I like PSTH? Bill Ackman structured in such a way, retail investors comes first. You know what you are buying unlike all SPACS and he essentially cut his own bonus by removing sponsor & director warrants for UMG.
After reading through, it looks like a you burn, I burn move. I love it, it’s what I do too. The reason why I’ve never accepted any sponsorships because if I do, it may somehow incentives me to lean towards one side. Last year, I could make extra a few hundred grand, but well, I’m the poorest 200K sub financial YouTuber out there.
Appreciate any thumbs up for that man. There is this Ytber, not gonna mention names, he claims he has 10X my wealth meaning 100 million and above but he as a Patreon. That’s sad. Even if it’s true, at what point money is enough? I can’t imagine the amount of good I can bring to this world with that kind of money.
The amount of animals I can save, the amount of people I can help. It’s crazy. Anyways Bill Ackman, is traditional old school value play. He likes Simple predictable free cash flow businesses, Dominant companies with large barriers of entry, High returns on capital with Limited exposure to risk he can’t control, a Strong balance sheet, not needing access to capital to survive and have excellent management.
Universal Music Group fits the bill. PSTH is the biggest SPAC ever. It’s not a normal SPAC. PSTH is designed very differently and it incentivises long term holding. I don’t want go too deep, TLDR, for those who holds through merger, gets plenty of freebies highlighted here in point 2 & 3. Basically free stock.
I’ll link the slides below in the description. This creates a wild incentive for long term holding. As a PSTH shareholder, you will own 3 different stocks after the deal is done. In total, you will end up with UMG shares, Remainco & SPARC Warrants 1, 2 and 3. On top of the free shares mentioned. We’ll calculate the numbers later.
Let’s talk price first, you are not buying this at highs. SPACS got hit quite bad from Feb. Buying low is good. Is it the bottom? Nobody can time it, if you really wanna know, ask my donkey. Bill Ackman confirms to acquire 10% of Universal Music Group with roughly 4 Billion. This means, later this year, you can go up to Taylor Swift and tell her you own her ***.
How much is UMG worth? Bill Ackman negotiated for $14.50 per share of UMG. Is it cheap? Yes. Bill Arkman secured UMG at enterprise value of 33 billion euros. Now it’s worth 25% more. Valued by both Goldman Sachs & JPMorgan. This means, $14.50 X 25% = $18.13 per share. Do note this is one of the biggest listings in EU, there will be a rush of buyers after IPO pushing prices up.
The 2nd stock, Remainco that you will own. Equals to $5.50. Will be the largest publicly traded acquisition company. Assuming he is able to find another deal at 20% upside, common 20%, easy for Bill Ackman. After all, he stole Brad Pitt’s girlfriend and married her. 3rd. SPARC warrants. This is a little no brainer.
Bill Ackman will find the next company to invest. I suspect it would be stripe. All rumours. The stock will be worth $24 per share post business combination, net settlement. You will have the rights to buy it at $20. Free $4. Not sure how many stocks will the warrant allow to convert. So let’s assume 1 for 1.
Let’s do the math. UMG worth $18.13, Remainco worth $5.55. That’s worth $23.68 today. While stocks sits at $22.70 as of making this video. That’s free money. I’ve not added in the 20% upside potential of Remainco and SPARC warrants assuming $4 immediate arbitrage profit. Let’s add everything. $18.13 for UMG, Remainco with 20% upside rounding to $6.66 and free $4 from SPARC and that’s $28.79.
Including the free shares for holding, remember point 2 and 3? That’s worth $4.80. Total $33.60 and today price is $22.70. My maths maybe a little off, been busy, had little sleep, just finish gym. No excuse but I’m tired. If I made any mistakes do let me know in the comments below Wrapping up, I love what Bill is doing here.
Looking after shareholder interest first. The first SPAC of it’s kind and I love it. Again, not the kind of stocks I love to buy, I prefer stocks with higher total address markets (TAM) and the potential to change the world. But what the heck, this deal looks good. I spend a good 2 weeks on this, hope you learn something, appreciate any thumbs up to support the causes what I love, as always invest safe.
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