Motley Fool talking SPACs: The Incredible Bulk

By Toby Shute - July 9, 2007

Speaking of margin of safety, I've stolen my dry bulk shipper idea from the guy who wrote the book on the subject. In case you don't have the $1,450 to shell out on a used copy of Seth Klarman's Margin of Safety on Amazon.com (Nasdaq: AMZN), there are extensive notes presented here. Klarman runs a hedge fund called the Baupost Group, and I enjoy checking out his top holdings from time to time. The guy has turned in some world-beating results, even while reportedly maintaining massive cash balances, so his positions are always worth a peek.

I was initially surprised to discover Star Maritime Acquisition (AMEX: SEA) among the firm's largest reported holdings -- first, because I'd never heard of it, and second, because once I looked it up, I discovered that it's a blank-check company. Fellow Fool Emil Lee explained both the how's and why's of investing in these vehicles, also known as SPACs (special purpose acquisition company). I think the key phrase from those articles is "heads I win, tails I get my money back with interest." A SPAC either finds an acquisition target by a set date, or it liquidates and returns the capital to shareholders.

Read more >>> TMF "The Incredible Bulk"

See also >>> TMF Return of the SPAC: Part 1 and TMF Return of the SPAC: Part 2