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Fusion Acquisition Corp SPAC Warrants

Written by Donnie Nguyen

September 12, 2020

VIDEO TRANSCRIPT

Fusion Acquisition Corp SPAC warrants. That’s what we’re going to be talking about in today’s video coming up. 

I am not a financial advisor. This video is for entertainment purposes only. Learn to invest like a Wolf at your own risk. 

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What’s up, everyone? Welcome back to my channel, Wolves Of Investing. My name is Donnie Nguyen, and I’m the founder of Wolves Of Investing. If you’re new, my channel is primarily about investing in the stock market. If you want to learn how to achieve financial freedom through investing, be sure to click on that subscribe button and notification bell if you haven’t yet. 

All right, so today we’re going to be talking about the Fusion Acquisition Corp SPAC stock warrants, and this is a SPAC that’s focused on Fintech. Their closing price at the time that I made this video was 90 cents per warrant. I am currently invested in these warrants. And I’m going to talk about why I’m in this trade and talk about the risks.

All right, so first, I want to talk a little bit about my position sizing, the reason behind my position sizing, and a bit of the risks. So these warrants are listed as FUSE+ on TD Ameritrade. I currently have $350.00 invested at 70 cents per warrant for a total of 500 warrants. 

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This is a very high-risk trade. I could easily lose 50 percent or more of my capital, and these warrants could expire worthless. So it’s not like my long-term investments. It’s not like the S&P 500, where I can just dump a ton of money into the S&P, and even if the S&P 500 drops fifty percent, I can just dump more money into it as long as I’ve got 10 or 15 years of investing left. If these stock warrants expire worthless, they are gone to zero forever, so this is a very high-risk trade.

So to mitigate that risk, I’m currently investing no more than one percent of my capital. I may scale this up a little bit, but I do plan to keep these trades to a very small part of my portfolio. 

Next, let’s talk about why I like this SPAC.

The first reason I like this SPAC is for its management team. Jim Ross is the non-executive chairman and a senior advisor to State Street since May 2020, executive vice president of SSGA from 2013-2020, chairman of the global SPDR ETF business from 2016 to 2020, global head of the SPDR business from 2012 to 2016, responsible for all aspects of the SPDR business including profit and loss management, product innovation sales and marketing.

  • Numerous executive positions such as director and chairman of the board for State Street Global Advisors funds management and SSGA’s registered investment advisor from 2012 to 2020
  • Member of SSGA’s executive management group as well as SSGA’s global product committee from 2015 to 2020 and 2009 to 2020
  • Responsible for leading SSGA’s engagement with ETF stakeholders, including regulators, mutual fund and ETF board of directors, industry associations, key clients, partners in the media

And here on State Street’s website, Jim Ross, SPDR chairman, and ETF innovator to retire. Ross, who joined State Street in 1992, was instrumental in creating, developing, and bringing to market many of the world’s first ETFs, earning him the moniker the godfather of ETFs.

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The product grew from inception in 1993 when SPY was launched on the American Stock Exchange to an industry that today stands at almost six trillion dollars worldwide and is still one of the fastest-growing investment products in the market.

Without question, Jim has been one of the most influential figures in the investment management industry. His role in creating many of the world’s first ETFs ensures he will go down in history as an instrumental player and perhaps the most important product innovation the industry has seen.

The ETF today provides a vital diversified investment product for investors across the spectrum and for that we and the industry owe Jim a great deal.

Jim’s contribution to the history of financial services is irrefutable. He is a titan who has played a key role in enabling institutional and individual investors to invest in new and unique manners with greater precision of exposures and liquidity. We are extremely proud of his accomplishments in helping to create many of the world’s first ETFs.

The next reason I like this trade is that the warrants are currently trading under one dollar. And I think that they could hit two dollars in less than one year. So to get a hundred percent return on my investment in less than one year would be pretty incredible. And the reason I think that is because I’m comparing this trade to another trade that I just recently made that made me one-hundred percent in one month. And that trade was with LF Capital Acquisition Corp warrants.

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And their SPAC had a very similar story and they had a really solid management team in the financial industry. As you can see here, I made a very small trade on August 3rd in the 60 cent range for these warrants. And then I got out of that trade on August 31st for $1.65. So in less than one month, I made over 100 return on my investment in this particular trade.

All right, so now I’d like to talk a little bit about the risks. The first risk, of course, is that a warrant can expire worthless if no deal is made, so I can lose 100 of my capital. I’m not too worried about this particular risk because most SPACs are actually getting their deals through. And the SPAC management teams have a huge monetary incentive to get a deal done. Okay, so the next risk is that the merger target could be a dud. And if they do pick a company that investors don’t like, the warrants can drop 50 or more.

Just because they have a great management team does not necessarily mean that they’re going to find this awesome company that investors will shoot to the moon.

And the last risk that I don’t hear a lot of people talking about is that we could potentially be in a bubble. And I’m not talking about general market bubble. I’m talking specifically about SPACs.

When I was making this video, there were approximately 100 to 150 SPACs in their searching phase. And there are new SPACs filing pretty much every day. By the end of next year, I’m predicting that we could have 300 or more SPACs in their searching phase. So it’s kind of hard to say if we are in a bubble or not. You often don’t know you’re in a bubble until it bursts, and you lose all your money. So this is a real risk, and if we are in a bubble it could burst at any time!

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M1Finance.com

All right so tell me what you think about the FUSE warrants. What do you think about this trade? I’m really interested in hearing your opinions and thoughts about this particular trade. Drop me a line in the comment box and be sure to leave a like on this video before leaving.

Thank you so much for watching and I’ll see you next time.

DISCLAIMER: I'm not a financial advisor. These are my opinions and provided "as-is". It is not an offer to buy or sell securities. Read the Terms and Conditions.

Disclosure

I/we own the FUSE warrants

Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies whose stocks are discussed in this article.

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Donnie Nguyen

Donnie Nguyen

Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.

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