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Pershing Square Tontine Holdings filed for an IPO Monday, June 22. The company is offering 150 shares for $20, to raise a total of $3 billion.
The new fund is targeting "mature unicorns," which has startup investors anxious to get in on the action. But don't invest in the Tontine IPO before you consider the startup investing strategy we have for you today…
This is a new blank-check company à la Bill Ackman, the hedge fund manager who effectively told CNBC the world was ending in March before shorting the market and turning $27 million into $2 billion.
Call it opportunism or luck, Ackman is again making the best of the coronavirus' impact on the markets. The company said that "dislocations in both the stock market and private growth equity markets, combined with a number of high-profile investment failures" have dried the well that would fund otherwise potentially successful startups.
Now, with these companies starved for funding, Ackman sees a profit opportunity.
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The company says it will target "mature unicorns" in its ventures. This is a word for private companies worth more than $1 billion. But it can also include IPOs and family-owned companies.
The Pershing Square Tontine Holdings stock ticker will be NYSE: PSTH.U. But should you invest in Tontine? Here is what you should know about the company before it goes public…
When Is the Tontine IPO?
Tontine is expected to IPO 52 days after the filing date, June 22. That would make its IPO as early as Friday, Aug. 13.
Tontine Holdings is what's referred to as a special purpose acquisition company (SPAC). That's when a company does not have any commercial operations and is formed solely to raise capital from its IPO.
So then how can you make money investing in Tontine?
Is Tontine Profitable?
Because the Tontine IPO is an SPAC, you don't have much data to draw from until it starts trading.
But we do know this is set to be the largest SPAC IPO in history. So, it does mean a lot of money for Pershing Square Tontine. However, because it's a new blank-check company, we're still yet to see what revenue looks like.
Investing in startups will be the bulk of its activity, which will make its balance sheet pretty straightforward. Tontine's profitability will hinge on the performance of the startups it invests in.4
How Much Is Tontine Stock Worth?
Pershing Square Tontine Holdings will open at $20 when it begins trading on the New York Stock Exchange in August.
We are still yet to find out which "mature unicorns" the company wants to buy. That company's success could make or break the stock.
In that case, you will have to stay updated on the latest COVID-19 news and watch the markets closely to see which industries have proven resilient through the crash.
Now, it's just $20. But before you go investing in IPOs, there's one more thing you should know…
Should I Invest in Tontine IPO?
About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.