At least one hedge fund has its stake in the SPAC. sold Digital World Acquisition Corp. after The company announced plans to merge with the social media company planned by the former president Donald Trump.
Lighthouse Investment Partners, one of at least nine hedge funds that hold shares in Digital World Acquisition, abandoned its stakes in this particular acquisition company after learning of its merger with Trump’s Venture, the fund told CNBC on Friday.
Lighthouse owned 3.2 million shares, or 11.2% of the SPAC, according to a government filing dated Sept. 30.
“Lighthouse was unaware of the upcoming merger and no longer holds unrestricted shares in SPAC,” the fund said. When asked if Lighthouse had benefited from its DWAC investment, the company said it would not comment.
The sell-off came when DWAC saw that a huge surge in stock price on Thursday following the merger news.
DWAC shares up more than 100% on Friday after the share price more than quadrupled in the previous session.
It’s not clear whether the hedge fund was sold to capture profits from its stake in DWAC or whether it was concerned about the risk of being associated with Trump, who was twice indicted and accused as president of the fatal one For instigating the January 6th Capitol Rebellion among his followers.
The social media app is developed by the Trump Media and Technology Group (TMTG).
Rafael Henrique | LightRakete | Getty Images
SPACs, also known as blank check companies, are formed to raise capital from the public stock markets and then use that cash to merge with a private company that has or will have an actual operating business.
The shares of this merged company will then be traded under the stock market ticker created by SPAC.
Investors in SPACs are generally unaware of the identity of the other company being considered for a merger.
Among the other hedge funds listed as major DWAC shareholders in September, DE Shaw owned 8% of SPAC, or 2.4 million shares, while ARC Capital held nearly 18%, or 6.6 million shares.
Other funds that held stakes in the last month prior to the announcement of the merger were Saba Capital Management, Highbridge Capital Management, Lighthouse Investment Partners, K2 Principal Fund, ATW Spac Management, Boothbay Fund Management, and RG Capital Management.
Highbridge Capital Management and ATW Spac Management declined to comment when asked if they would keep shares in DWAC, and the rest of the hedge funds did not immediately respond to CNBC’s requests for comment.
Another fund listed as a major DWAC investor is ARC Global Investments II, LLC.
The executive member of ARC Global is listed in a government filing as Patrick Orlando, who is also the CEO of DWAC.
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In an 8-K filing with the Securities and Exchange Commission on Thursday, DWAC announced that it had entered into an agreement and merger plan with DWAC Merger Sub Inc., a wholly owned subsidiary of DWAC, and Trump Media & Technology Group ARC Global Investments II.
Trump’s company, the previously unstarted Trump Media & Technology Group, said in an announcement on Wednesday that his “mission is to create a rival for the liberal media consortium and to fight back against the ‘big tech’ companies of Silicon Valley that have used their one-sided power to silence opposing voices in America.”
Trump was banned from Twitter, his favorite social media platform, and Facebook earlier this year after he was accused of sparking the Capitol invasion.
A top post on the WallStreetBets forum on Friday revealed what the user’s stock portfolio looked like and touted daily winnings of over $ 10,000 from wagering on DWAC. The post calling the former president “Daddy Trump” quickly drew more than 800 comments.
This is the latest news. Check back for updates.