Sirwin
Sirwin

OPINION: Two SPACs With Warrants That Are Worth a Shot


First of all, I should preface this blog post by saying this is not financial advice. It is a blog post, and I am not a qualified financial advisor. This post is pretty much "what I'm doing and why." Trading in any stock is inherently risky, especially warrants of Special Purpose Acquisition Companies. I assume you are aware of what a SPAC is. But, if you're not familiar, here is a helpful .PDF that explains what a SPAC is and how the process works.

AMCI (Target Announced: LanzaTech)

AMCI Acquisition Corp II announced back in March its definitive agreement with LanzaTech, a Carbon Capture Technology company whose platform combines biology and engineering to transform waste carbon from factories into useful materials and high-value products. The end products include fuels, fabrics, and packaging. 

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The warrants have traded very poorly in 2022. After the deal with LanzaTech was announced on March 8, there was some interest which created a bit of a boost. Since then, however, they have headed toward all-time lows. With Congress just passing the Inflation Reduction Act, which includes $369 billion for clean energy (including certain provisions for carbon capture projects), one would think that interest in a company like LanzaTech would surge. Perhaps it still may. 

The AMCI warrants are as cheap now as they have ever been. The immediate risk going forward is a deal termination, of which there have been half a dozen in August thus far. In fact, many SPAC deals have terminated in 2022, citing unfavorable market conditions. Should AMCI and LanzaTech terminate the deal, AMCI still has until August 2023 to complete a business combination with another target. However, one can argue that the reward far outweighs the risk at the current prices. It's really all a matter of opinion. 

ROCL (Searching for a Target)

Roth Capital has been a big name on the SPAC scene for the past two years, colloquially known as a "serial SPACster." Having successfully closed three deals in the past few years, it is my opinion that they would want to uphold their reputation and won't let their vehicles liquidate. They actually have two separate $115M SPACs actively searching for targets right now, Roth CH Acquisiton IV (ticker ROCG) and Roth CH Acquisition V (ticker ROCL). 

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I personally went for ROCL because the warrants are currently a nickel cheaper. Why not choose more bang for your buck? Both vehicles have the same management team and searching for targets in any sector. My opinion is that the ROCL warrants currently have less room to the downside than ROCG warrants. From the current levels, a definitive agreement with a target company may be the catalyst to give the warrant price a boost.


So there you have it, just a couple of SPACs with warrants that I believe may make for a good trade. They can be quite lucrative, if played properly. Any kind of boost in the prices of these can be significant gains. The trouble with SPAC warrants, especially as of late, is there tends to be a lack of volume in trading. They can also expire worthless, should a SPAC fail to find a target and liquidate. As stated above, this writing is just my opinion and is not intended to be any kind of financial advice. Hopefully it's at least educational and you can use the links below to do your own research.

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dot com boomer - writing mostly on crypto, stocks, entertainment, etc.


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