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Hedge Fund Giant Warns of SPAC Blowup After Betting $1 Billion

  • Marshall Wace has built up long and short exposure to SPACs
  • It’s now increasing short bets as potential for trouble grows
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April 13: SPAC Fervor Faces Potential SEC Threat

Hedge fund giant Marshall Wace is ringing alarm bells about the booming SPAC market after building up long and short bets on blank-check companies that total more than $1 billion.

The life cycle of SPACs, or special purpose acquisition companies, is riddled with “perverse incentives” for investors, sponsors and the companies using the shortcut route to come to market, Paul Marshall, co-founder of the investment firm, told his investors in a newsletter. SPACs have delivered “awful returns” and most recent issuances will be no different, he said.