NEW YORK, September 21, 2021 / PRNewswire / – CrossingBridge Advisors, LLC (“CrossingBridge”), an investment management firm specializing in ultra-short and short duration strategies, including Special Purpose Acquisition Companies (SPAC), announced today hui the launch of the pre-merger SPAC CrossingBridge ETF [NASDAQ: SPC].
Typically, SPACs are fully backed by US government securities with a mandatory liquidation date within two years. SPC will purchase SPCs at collateral or lower value with the intention of selling the shares before or at the time of a business combination. Therefore, CrossingBridge believes that a pre-merger SPAC portfolio will provide investors with higher returns than other fixed income products while significantly limiting downside risk.
“SPC is a tenant, not an owner,” said CrossingBridge founder and portfolio manager, David Sherman. “In other words, we aim to capture the fixed income nature of pre-merger SPACs purchased at a discount to collateral with potential for shareholder action reacting favorably to an announced transaction. not interested in being a post-company investor rally – that’s a whole different ball game. “
According to CrossingBridge, SPACs offer very similar characteristics to fixed income securities, including:
- SPACs have a liquidation date that is equivalent to the maturity date of a bond.
- PSPC common shareholders have a full redemption right in a business combination, similar to a change of control sale provision found in corporate debt instruments.
- PSPCs are fully collateralized by US government securities for the benefit of common shareholders of PSPC which will be paid up on redemption or liquidation. Therefore, when an investor purchases PSPC common stock below the value of their pro-rated trust account and holds the security until the redemption or liquidation date, the investor will receive a positive return, similar to the return. a fixed income security until maturity.
- SPACs can gain equity by participating in an attractive business combination. This benefit is similar to a convertible bond with the added feature that PSPC investors can redeem their common stock for their collateral value rather than continuing to own it after the transaction.
PSPC is not a new asset class for Sherman; he made his first PSPC investment over 15 years ago. With the growing popularity and capital flowing into SPAC, Sherman has significantly increased the company’s exposure to SPAC in recent years. CrossingBridge believes that the market is now large and liquid enough to effectively manage dedicated PSPC strategies.
“Our guiding principle has been, and will continue to be, that return on capital is more important than return on capital,” said Sherman.
For more information on CrossingBridge, please contact André Flach at 973-769-3914 or [email protected]
About CrossingBridge Advisors
Led by the founder David Sherman, a veteran of high yield and opportunistic corporate lending with over 30 years of experience. CrossingBridge Advisors is an investment management firm specializing in ultra-short and low-duration strategies, which includes Special Purpose Acquisition Companies (SPACs), as well as responsible corporate debt investments. Now with four funds, CrossingBridge offers a diverse range of fixed income products that can fit into a variety of income portfolios and strategies. For more information visit: www.crossingbridgefunds.com.
The investment objectives, risks, charges and expenses of the fund should be carefully considered before investing. The prospectus contains this and others information about the investment company, and it can be obtained by calling 855-552-5863, or by visiting www.crossingbridgefunds.com/spac-etf. Read it carefully before investing.
Investing involves risks; The main loss is possible. The Fund invests in equity securities and SPAC warrants. Pre-consolidation SPACs have no operating history or current activity other than looking for consolidation, and the value of their securities depends particularly on the ability of the entity’s management to identify and achieve a profitable consolidation. There can be no assurance that the SPACs in which the Fund invests will effect a Combination or that any Combination carried out will be profitable. Unless and until a consolidation is completed, a SPAC typically invests its assets in US government securities, money market securities, and cash. Public shareholders of SAVS may not be able to vote on a proposed initial consolidation because some shareholders, including shareholders affiliated with the management of the SAVS, may have sufficient voting power and a financial incentive to approve such a transaction without support. public shareholders. Consequently, a SPAC can carry out a Regrouping even if the majority of its public shareholders do not support such a Regrouping. Some SAVS may search for Combinations only in certain industries or regions, which may increase their price volatility.
Stocks are generally viewed as presenting more financial risk than bonds in that bondholders have a greater claim on the operations or assets of the company than stockholders. In addition, stock prices are generally more volatile than bond prices. Investments in debt securities generally lose value when interest rates rise and this risk is generally greater for longer term debt securities. Bonds are often held by people interested in current income, while stocks are typically held by people seeking price appreciation, with income being a secondary concern. The tax treatment of bond and stock returns also differs due to the different tax treatment of income versus capital gain.
Duration is defined as the weighted average of the present value of cash flows and is used as a measure of the response of a bond’s price to changes in yield. The yield to maturity (YTM) is the return on the portfolio if all bonds are held to maturity; it is based on the stated due date or the official call date. A change of control Put clause protects lenders in the event that control of the borrower changes hands due to changes in shareholding or board composition. The change of control clause Put is a right available to bondholders to oblige the company to immediately reimburse bondholders for the nominal amount invested.
CrossingBridge Advisors, LLC, is the advisor to the CrossingBridge Pre-Fusion SPAC ETF which is distributed by Foreside Fund Services, LLC. CrossingBridge Advisors, LLC is not affiliated with Foreside Fund Services, LLC.
SOURCE CrossingBridge Advisors, LLC