| |  | TOGETHER WITH |  | | | Good morning.
According to a new report from realty firm Douglas Elliman, a bidding war erupts over one in every five rental apartments in Manhattan. One big reason for this: there are now more apartments in New York City listed for rent on Airbnb — 10,572 — than there are available rental units — 7,669. Those waiting for a place could consider taking a working vacation, something Airbnb CEO Brian Chesky has suggested will become more popular.
Some worthy backdrops include the beautiful canals of Venice, the mountains and oceans around Rio de Janeiro, and the Richmond Avenue Trader Joe's in Staten Island. | | | • | | Just about 300 SPACs need to find a merger partner in the next three quarters — or their founders lose the cash they put in. | | • | | Blackstone has a new target. | | • | | A bipartisan alliance in Washington is calling for an end to the baby formula shortage. | | | | |  | Investing | Untethered SPACs are Rushing to Merge Before Their Founders Lose Money | | Do deadlines stress you out? Trigger warning: don’t read the following story.
Roughly 300 SPACs must find a company to merge with in the next three quarters or their backers risk losing the money they put in, according to figures from data provider SPAC Research. The problem: SPACs, trendy in public markets just a year ago, are practically toxic now. | Save the Last Dance | | Special-purpose acquisition companies (SPACs), shell corporations that list publicly so they can take another company public by way of merger, were remarkably popular during the white-hot bull market of the last two years. There were 305 SPAC mergers in 2020 and 2021 combined, versus just 26 in 2019. But last summer, the SEC cracked down on the practice and, ever since, SPACs have been in freefall.
If that wasn’t bad enough, there are still some 280 untethered SPACs — those which have failed to find merger partners — with transaction deadlines in the first quarter of 2023. If they miss the deadline, typically two years to close a deal, SPACs must return investor capital and eat up to $10 million in structuring fees (for the bankers and lawyers). This has created an awkward middle-school dance scenario, with SPACs seeking out dance partners just when just about everyone thinks they’ve lost their step: | • | | According to The Wall Street Journal, one exchange-traded fund tracking companies that have merged with SPACs is down 30% this year, materially worse than the overall market. Betting platform DraftKings and online bank SoFi Technologies are down over 50%. Who wants to merge onto that highway to nowhere? | | • | | There were only 16 SPAC mergers in the first three months of 2022, according to law firm White & Case. If that trend continues, most of these SPACs are going home empty-handed, and their founders and investors are expected to lose at least $1 billion that they’ve put in and won’t be able to get back. | | | | “It’s a ticking time bomb,” Matt Simpson, a partner at Wealthspring Capital, told the WSJ. Analysts fret some SPACs could merge with weak companies and go public just to avoid losses.
One for the Record Books: Denis Sverdlov, the founder of electric vehicle maker Arrival, was worth $11.7 billion a year ago when shares in his firm soared after a SPAC merger. Those shares have fallen 90% since and Sverdlov is no longer a billionaire. At least he doesn’t have to worry about gas prices. | | | | | | Media | Popular Science Publisher Scores $300 Million Raise Led By Blackstone | | After throwing gobs of money at high-profile entertainment companies founded by Will Smith and Reese Witherspoon, private equity giant Blackstone is turning from one media sphere to another.
On Wednesday, the firm led a $300 million fundraising round for Recurrent Ventures, the owner behind magazine titles like Popular Science and military publication Task & Purpose. | The Cover Story | | Recurrent was spun out by another PE firm, North Equity, to house its media properties in 2018. The platform has accumulated 24 niche publications including automotive digest The Drive, food-focused Saveur, and men's publication MEL Magazine.
In a digital advertising landscape dominated by the likes of Google and Facebook, Recurrent hopes to build scale — the kind attractive to blue-chip advertisers — with the added precision of interest-based publications.
Recurrent also successfully diversified its revenue streams, with ads accounting for only about half its income, 30% coming from ecommerce affiliate marketing and product recommendations, and the rest from subscriptions, events, and content-licensing deals, CEO Lance Johnson told The Wall Street Journal. With the winds of Blackstone now at its back, Recurrent says it is looking to continue to grow: | • | | Johnson says more growth will lead to more properties under its umbrella, meaning more advertisement scale. In turn, Johnson says Recurrent is keeping its doors open to either a potential IPO or a merger or sale to another large media company. | | • | | Recurrent’s operating-profit margin on an EBITDA basis was over 20% in 2021, and the company hopes it can push it to better than 30% in the coming years, as it leverages greater and greater scale, WSJ reports. | | | | Yesterday’s News: Given the current atmosphere for such things, an IPO could be a too-lofty goal for Recurrent. Last year, BuzzFeed’s much-publicized introduction to the public markets via SPAC merger quickly fizzled — its stock cratered immediately and now trades at around $3.70 per share, down from the original $10. Vice Media, which had been fundraising with an eye toward going public for years, has largely abandoned all such plans. Perhaps the pages of Recurrent’s future-focused outlet Futurism show a much rosier world of tomorrow for digital publishers. | | | | | | SPONSORED BY YIELDSTREET | Private Opportunities | | $1.5 billion.
That’s the amount of capital Yieldstreet has returned to shareholders through principal and investment returns.
How do they execute? Less than 10% of deals that come across Yieldstreet’s collective desk passed their investment approval process to date. Their experienced team deploys three core strategies: | • | | Income — Targets current income through assets in private credit, real estate, and structured notes. | | • | | Growth — Built for capital appreciation via investments in private equity, venture capital, and art equity. | | | | | In the year 2000, there were 8,000 publicly traded companies. Today, that number sits at just 3,700. Meanwhile, private market assets under management have grown 170% within the last decade. What does it all mean? More opportunities sit out of reach from individual investors. With Yieldstreet, you can tap this previously off-limits asset class. Explore the opportunities on Yieldstreet today. | | | | Supply Chains | There’s a New Bipartisan Effort to Fix the Baby Formula Shortage |  | | In an election year, politicians on opposite sides of the aisle tend not to agree on much, even if it’s just for the sake of campaign posturing. Not in this case.
On Wednesday, a group of congresspeople from both parties urged the White House to use the Defense Production Act to help end a baby formula shortage causing worry for millions of American parents. By late afternoon, President Joe Biden was on board. Perhaps congressional gridlock isn’t insurmountable after all. | Bringing Up Baby Formula Production | | Everyone agrees on one thing: there is a baby formula shortage. Earlier this month, 43% of baby formula was out of stock at US retailers, according to data firm Datasembly. But ask for the reason and expect finger-pointing all around.
Stores have blamed formula producers for having supply-chain issues. Formula manufacturers criticized retailers for their backed-up logistics networks. Republicans chastised the Food and Drug Administration for forcing Abbott Laboratories, a major formula manufacturer, to issue recalls and close a plant in Michigan during an investigation into a bacterial outbreak. Democrats blamed consolidation: four companies — Abbott, Mead Johnson, Perrigo, and Nestle — control 87% of the $4 billion US baby formula market. Thankfully, everyone agreed something needed to be done: | • | | The Defense Protection Act allows the government to direct the private sector to up the production of key goods during national emergencies. Following Wednesday’s order, suppliers of baby formula ingredients will prioritize delivering the goods to key manufacturers before other customers. Defense Department aircraft have also been cleared to fly in formula from abroad. | | • | | It's the second time Biden has invoked the act in as many months, after ordering in April that $3.1 billion be spent to boost the production of minerals used in the manufacture of batteries used in electronics and vehicles. | | | | Whatever It Takes: Abbott and the FDA agreed on a reopening plan for the Michigan plant on Monday, but Abbott has to wait for the agency to give the formal go-ahead. It will take up to two weeks to restart the facility, and another six to eight weeks until product reaches shelves. | | | | | | Extra Upside | • | | Tesla has been booted from the S&P 500 environmental, social, and governance (ESG) index because of its working conditions and safety concerns. | | • | | Extra Upsides do not equal endorsements: a website allows people to prank call Russian bureaucrats to protest the war in Ukraine. | | • | | When’s the last time you heard a farmer complain about inflation? Trick question, because many farmers are actually the beneficiaries of record-high inflation. How so? Because over time, inflation = higher crop income, and as a result farmland has proven incredibly inflation resistant, and can even be a boon. As an example, think of your sticker shock at the grocery store, but in reverse. With Acretrader, you can tap this previously out-of-reach asset class and get started with farmland investing. Explore AcreTrader today.* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
