We scour the net for great ideas, so you don't have to
Claim this username to collect earnings from this post, and the portfolio!
May 20, 2022
[1 min Read]
I got some information about a recent DeSpac play that makes it extremely susceptible to volatile movements. Big Bear AI a deSPAC play has released information via S-1 Filings that reveal that it currently has an extremely low float under a certain price point $10.15 with just 1,048,504 Shares available under that price point the rest have to be sold at or above that price. Because of Backstop Agreements and Forward Purchase Agreements that the company got into in order to have enough cash for the merger to go through.
This information presents an extremely wonderful opportunity to investors with this being a value play as well as a low float Squeeze play. If enough shares and options get purchased and excises it would force call writers to buy more shares to delta hedge and cause the price to spike to or above 10.15. Backstop Shares don't have to be sold at prices that they are allowed to because either way they will get paid for there shares. And with AE being the purchaser of majority of the Backstop Shares and being an owner of 80% of the shares that are under a 12 month lock-up period unless the price exceeds $12.50 for more than twenty trading days they have an incentive to let the price run up while call sellers will be forced to buy their shares at a premium.