SPAC Trust Unit Arbitrage Strategy
Company: Tokenizer & SureFire Capital
Asset Type: Finance
Sharpe Ratio: 1.23
Tokenizer, in partnership with SureFire Capital, is pleased to offer a short term buffered note with a very solid yield and the protection of an equity buffer.
Overview
Proceeds of the note are invested in a niche strategy focused on arbitrage opportunity in the SPAC market. The Portfolio Manager acquires SPAC Trust Units below Trust Value and actively trades them - offering lenders an attractive, risk-adjusted target return.
Watch the replay of Tokenizer's webinar with SureFire Capital's CEO Ariel Shlien discussing all things buffered notes! Link
Terms:
8% Fixed Coupon paid quarterly
10% Equity Buffer
Strategy Performance Metrics
- 82.76% Positive Months since Inception
- 64.72% Total Return
- 1.23 Sharpe Ratio
- 1.85% Avg Monthly Return
- 22.94% Annualized Return
SPAC Explained
- SPAC stands for “Special Purpose Acquisition Corporation”
- SPACs are publicly listed shell corporations which exist to acquire an operating company
within a fixed amount of time (usually 12 – 24 months) - SPAC shares (“Trust Units”) are issued at $10/unit and trade in the market
- At SPAC issuance, the full value of $10/unit is put into a Trust Account and kept until the acquisition
- Once the SPAC management team announces an acquisition (“Announcement Date”), investors can vote on a date typically 3-4 months later (“Vote Date”), to either:
- (i) participate in the acquisition and become shareholders of the new publicly-listed company;
- or (ii) redeem their shares (Trust Units) at the full $10/unit Trust Value
- There is asymmetric risk/return exposure because the SPAC shares can trade higher or lower than the $10/share issue price based on market sentiment, and each investor has the option to redeem at the full $10 Trust Value on the Vote Date
Investment Strategy
- Acquire SPAC Trust Units in the primary/secondary market at or below $10/share Trust Value
- Sell or redeem the Trust Units for a profit when they reach or exceed the Trust Value
- Since $10/unit remains in the Trust Account, investors who bought at below Trust Value have minimal downside
- Market direction is irrelevant because each Trust Unit is fully backed by $10/unit in cash
(U.S. Treasury Bills) that remains in the Trust Account - Investor returns are uncorrelated to general financial markets. (Our Portfolio Manager has indicated that monthly drawdowns on the chart below are almost exclusively from mark-to-market as opposed to relized losses)
Strategy Net Returns
Essentials
About the Portfolio Manager
SureFire’s underlying Portfolio Manager is a large asset management firm with a 15-year track record and $1.2 billion AUM across several alternative investment strategies. The portfolio managers that oversee the SPAC strategy have decades of collective investment experience managing structured product portfolios and trading across equity, derivatives, and foreign exchange markets.
The trading strategy targets consistent absolute returns with low drawdowns in all market environments. The combination of (1) limited downside plus (2) SureFire’s equity buffer offers lenders access to an outsized return potential with meaningful protection due to the structural benefits of actively trading discounted SPAC Trust Units, knowing they are worth $10/ unit.
Portfolio Risk Management
- Broad portfolio diversification (max position size under 1.5% of AUM)
- The portfolio managers have been trading SPACS since 2003 (the first SPAC issuance)
- This is a long-only strategy (no shorting of SPACs)
- Regulated and trustworthy counterparties only
- Portfolio Management team consists of 3 traders in 2 geographic locations with backups
- Assets held in US Treasury Bills in Trust Account until investors choose whether to redeem
About SureFire Capital
SureFire is a family office that pursues trust-based relationships, sharing best ideas among a private global community of 1,100 investors. We find outperforming Portfolio Managers and invest our own capital as well as offer co-investment opportunities that emphasize true alignment of commitment, participation costs, and structure. Ariel Shlien, M.S.M., is CEO of SureFire Capital.
Disclaimer
This is a test the waters page.
Please register your interest to gain access to this opportunity via the button.
The above descriptions regarding the Portfolio Manager’s investment decision process, risk management and portfolio management practices, and volatility characteristics are derived solely from the Portfolio Manager, ad although thought to be reliable, has not been independently verified and cannot be guaranteed. SureFire makes no representations or warranties as to the accuracy or completeness of such information. The pro forma performance results reflected in the table above represent the Portfolio Manager’s actual net performance, as reported by the Portfolio Manager. All the underlying performance and fee information has been provided by the Portfolio Manager, and although assumed to be reliable, has not been independently verified by SureFire and cannot be guaranteed. SureFire makes no representations or warranties as to the accuracy or completeness of such information. The actual rates of return for investors in this strategy may differ. Past performance is not a guarantee of future results. The performance results reflected on the tables are based on the assumptions noted for each chart and are net of: (i) fees and incentive allocations to the portfolio manager, and (ii) transaction costs and other expenses incurred by the portfolio manager. The leverage assumptions, if any, reflected on the tables above as well as accompanying tables can have a significant effect on performance results, and is not necessarily indicative of actual leverage used by the portfolio managers during those periods, and is subject to change. This Presentation, and the information set forth herein and in related disclosures, does not constitute an offer or solicitation to invest in this Strategy or any investment vehicle managed by SureFire. There are substantial risks to investing in the Strategy and all interested parties should carefully consider them prior to investing. Past performance is neither indicative nor a guarantee of future results. No assurance can be made that profits will be achieved or that substantial losses will not be incurred.
