Weinstein’s Saba Capital sold stakes in SPAC as shares surged following Trump deal
(Reuters) – Two early investors in blank check firm Digital World Acquisition Corp. sold their holdings as news of the merger with former President Donald Trump’s new media company emerged.
Hedge fund manager Boaz Weinstein, who heads Saba Capital Management, and Lighthouse Investment Partners, said they walked out without giving a specific time for sales or the price they cashed in.
“I knew that for Saba the right thing to do was to sell our entire stake in unrestricted shares, which we have now done,” Weinstein said in a statement. The company sold on Thursday.
Lighthouse said on Friday it had also sold.
“Lighthouse was not aware of the ongoing merger and no longer owns unrestricted shares of PSPC,” the company said in a statement.
By definition, investors are not allowed to know the purpose of the merger when investing in a blank check company, so the association with Trump came as a total surprise, several investors said.
Many on Wall Street distanced themselves from Trump after the storming of the U.S. Capitol on January 6.
Trump Media and Technology Group and Digital World Acquisition Corp, a special-purpose acquisition vehicle, announced this week that they will merge to create a new social media app called TRUTH Social. Trump’s company said it plans a beta launch next month and a full rollout in the first quarter of 2022.
The market reaction was swift, with the stock surging 357% on Thursday and climbing 129% in active trading on Friday.
As many investors focus more on incorporating environmental, social, and governance factors into their investments, the blank check company’s association with Trump has sparked some overhaul.
“Many investors are grappling with difficult questions about how to incorporate their values into their work. For us, it wasn’t a big blow, ”Weinstein said in the statement.
Weinstein declined to say how much capital he initially committed and how much profit he could have made on Thursday when stocks surged. He also declined to say how his own investors might have reacted to the decision to pull out.
Weinstein’s fund manages around $ 3.5 billion and he rose to prominence by betting against trader JP Morgan Chase known as the “London Whale”. He has donated to Democratic candidates in the past, supporting President Joe Biden’s candidacy last year.
His wife, Tali Farhadian Weinstein, a former federal prosecutor, ran for the Manhattan district attorney this year, but lost in the Democratic primary to Alvin Bragg. The office is investigating Trump.
Reporting by Svea Herbst-Bayliss; Editing by Nick Macfie and Philippa Fletcher