Empty Wagons

The Credit Strategist Blog

Boxing great Joe Frazier had a wonderful saying: “An empty wagon makes the loudest noise.” The surest sign that a business figure is an empty wagon is whether he/she is being touted in the financial media as some type of genius.

First there was Chamath Palihapitiya, the so-called SPAC king, who preyed on retail investors to sell them shares in a series of SPACs that lost most of their value (SPCE, CLOV, SOFI, OPEN). After those deals blew up, Chamath shut down two other SPACS he formed although two other biotech-focused SPACs (DNAB and DNAD) are still looking for acquisitions. While investors lost huge amounts of money on his deals, Chamath’s company, Social Capital Holdings, reportedly earned about $750 million in fees and sales of shares in SPCE and CLOV. The fact that he sold those shares was hardly a vote of confidence in the deals. Chamath claimed SPACs were ushering in a revolution in capitalism when they were never more than blind pools with egregious fee arrangements for sponsors. Bullshit walks.