$OCA / KI post-DA, pre-merger DD

​ OCA daily chart OCA Overview Omnichannel Acquisition Corp ($OCA) is a SPAC that is taking public Kin Insurance. It has $207mm cash in trust and an $80mm PIPE. The merger is expected to conclude this year and the company's new ticker will be $KI. Leadership CEO - Matt Higgins. Executive Fellow at Harvard Business School. He is also CEO of investment firm RSE Ventures and an executive for the Miami Dolphins. Board member - Al Carey. He is currently a member of the board at Home Depot and chairman of the board at Unifi. Formerly, he was CEO of Pepsi (North America) and CEO of Frito-Lay (North America). Board member - Gary Vaynerchuk. Entrepreneur, author, motivational speaker, and Internet personality. Cofounder of restaurant reservation software company Resy and Empathy Wines. (Matt Higgins was an early investor in Gary's media company and they are BFFs, just FYI.) Board member - Vicky Free. Current SVP of marketing at Adidas. Former SVP at Disney. Former CMO at BET. She has also worked with McDonald's, Warner Media and VIACOM. n.b. The above list is from a Kin investor presentation. For a current/complete list, see OCA's website. Shareholders Glazer Capital, Kepos Capital, Omnichannel Sponsor LLC, Vellar Opportunities Fund Master, Cohen & Company Financial Management, Dekania Investors, ICS Opportunities, Millennium Management. Kin Overview Kin Interinsurance Network is a fully-online, direct-to-consumer, mostly-automated reciprocal inter-insurance exchange. Its services are limited to homeowners, condo, mobile home and landlord insurance. It is young and only in three markets: Florida, Louisiana and California--all high-risk markets. The company claims that its softwares' ability to predict risk and recommend premiums is so accurate that it can function more profitably in high-risk markets than traditional insurance companies. Kin plans to cover most of the east coast and midwest by 2025 and is acquiring a defunct insurance company in order to obtain its 40 state licenses. It plans to eventually expand to other insurance products as well as non-insurance products. It uses social media influencers for marketing. Its investors presentation predicts its adjusted gross profits will 15x next year, as compared to Root (1x), Metromile (15.1x), Hippo (47.7x), and Lemonade (54.4x). Kin has never been profitable and had a deficit of $30mm last year. From Kin's investor presentation Kin is bringing 961mm in shareholder equity with it to the merger which means, if no $OCA shareholders redeemed their shares, Kin would be worth $1.2 billion post-merger. Leadership CEO - Sean Harper. Founder of FeeFighters which he sold to Groupon and rebranded as Breadcrumb. CFO - Josh Cohen. Previously worked at Groupon, Deloitte, Avant and GE. CTO/President - Lucas Ward. Cofounded infosec company Rippleshot. Former CTO of Fundspire. Shareholders Kin is backed by August Capital and HSCM. Analysis OCA has a 21mm float and 26mm OS. OCA does not have options. As of 11/12, shares are trading at $9.95. Warrants are trading at around $1 give or take a few cents. Institutional ownership is 92% which means the retail float is closer to 2 million. Average volume is around 65k. RVol is .23. RSI is 56. The stock has traded consistently under NAV since May. Kin's own investor presentation shows that it expects less growth next year than its competitors. That plus the fact that it's in a crowded sector that is not doing particularly well plus the fact that it consistently trades under NAV suggests that redemptions could be high. In a Reddit AMA, CEO Matt Higgins said redemptions above 42% could nullify the merger agreement (though Kin can wave this requirement). For sake of comparison: According to SPAC Insider, $VIH/$BKKT, which was also trading under NAV on the day of the special meeting/merger vote, experienced 40.76% redemptions. While the OCA/Kin deal has experienced investors and leadership behind it, Kin is not a particularly interesting company and is entering a crowded space where it will have to go toe to toe with larger, better-established companies such as Lemonade ($LMND) and Hippo. It will also likely be years before it attains profitability. This deal can only afford 42% redemptions. I think it is a coin toss as to wether or not redemptions will be above 42%. However, I suspect redemptions will be high among retail traders, many of whom have likely been holding for months. I estimate the current retail float to be around 1.5 - 2 million. If only 50% of retail redeem, that will leave a < 1 million retail float. For such a low-volume stock, a small uptick in volume could easily move the price. The play I have warrants. My plan is to hold them and wait to see how many shares get redeemed. If a significant portion of the float gets redeemed, the new low float could generate significant retail interest which could drive up the price of commons and warrants. Because it does not have options, people who would normally trade options would likely gravitate to warrants. If redemption is below 42%, the price of warrants will likely remain stagnant and I will exit my position. Disclosure: I have a small position—100 warrants at $1. Disclaimer: I am not a financial advisor and pretty bad at math. Do your own DD.

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helvegr13

Nov 15, 2021

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$OCA / KI post-DA, pre-merger DD

bullish

OCA daily chart

OCA Overview

Omnichannel Acquisition Corp ($OCA) is a SPAC that is taking public Kin Insurance. It has $207mm cash in trust and an $80mm PIPE. The merger is expected to conclude this year and the company's new ticker will be $KI.

Leadership

  • CEO - Matt Higgins. Executive Fellow at Harvard Business School. He is also CEO of investment firm RSE Ventures and an executive for the Miami Dolphins.
  • Board member - Al Carey. He is currently a member of the board at Home Depot and chairman of the board at Unifi. Formerly, he was CEO of Pepsi (North America) and CEO of Frito-Lay (North America).
  • Board member - Gary Vaynerchuk. Entrepreneur, author, motivational speaker, and Internet personality. Cofounder of restaurant reservation software company Resy and Empathy Wines. (Matt Higgins was an early investor in Gary's media company and they are BFFs, just FYI.)
  • Board member - Vicky Free. Current SVP of marketing at Adidas. Former SVP at Disney. Former CMO at BET. She has also worked with McDonald's, Warner Media and VIACOM.

n.b. The above list is from a Kin investor presentation. For a current/complete list, see OCA's website.

Shareholders

Glazer Capital, Kepos Capital, Omnichannel Sponsor LLC, Vellar Opportunities Fund Master, Cohen & Company Financial Management, Dekania Investors, ICS Opportunities, Millennium Management.

Kin Overview

Kin Interinsurance Network is a fully-online, direct-to-consumer, mostly-automated reciprocal inter-insurance exchange. Its services are limited to homeowners, condo, mobile home and landlord insurance. It is young and only in three markets: Florida, Louisiana and California--all high-risk markets. The company claims that its softwares' ability to predict risk and recommend premiums is so accurate that it can function more profitably in high-risk markets than traditional insurance companies. Kin plans to cover most of the east coast and midwest by 2025 and is acquiring a defunct insurance company in order to obtain its 40 state licenses. It plans to eventually expand to other insurance products as well as non-insurance products. It uses social media influencers for marketing.

Its investors presentation predicts its adjusted gross profits will 15x next year, as compared to Root (1x), Metromile (15.1x), Hippo (47.7x), and Lemonade (54.4x). Kin has never been profitable and had a deficit of $30mm last year.

From Kin's investor presentation

Kin is bringing 961mm in shareholder equity with it to the merger which means, if no $OCA shareholders redeemed their shares, Kin would be worth $1.2 billion post-merger.

Leadership

  • CEO - Sean Harper. Founder of FeeFighters which he sold to Groupon and rebranded as Breadcrumb.
  • CFO - Josh Cohen. Previously worked at Groupon, Deloitte, Avant and GE.
  • CTO/President - Lucas Ward. Cofounded infosec company Rippleshot. Former CTO of Fundspire.

Shareholders

Kin is backed by August Capital and HSCM.

Analysis

OCA has a 21mm float and 26mm OS. OCA does not have options. As of 11/12, shares are trading at $9.95. Warrants are trading at around $1 give or take a few cents. Institutional ownership is 92% which means the retail float is closer to 2 million. Average volume is around 65k. RVol is .23. RSI is 56. The stock has traded consistently under NAV since May.

Kin's own investor presentation shows that it expects less growth next year than its competitors. That plus the fact that it's in a crowded sector that is not doing particularly well plus the fact that it consistently trades under NAV suggests that redemptions could be high. In a Reddit AMA, CEO Matt Higgins said redemptions above 42% could nullify the merger agreement (though Kin can wave this requirement). For sake of comparison: According to SPAC Insider, $VIH/$BKKT, which was also trading under NAV on the day of the special meeting/merger vote, experienced 40.76% redemptions.

While the OCA/Kin deal has experienced investors and leadership behind it, Kin is not a particularly interesting company and is entering a crowded space where it will have to go toe to toe with larger, better-established companies such as Lemonade ($LMND) and Hippo. It will also likely be years before it attains profitability. This deal can only afford 42% redemptions. I think it is a coin toss as to wether or not redemptions will be above 42%. However, I suspect redemptions will be high among retail traders, many of whom have likely been holding for months. I estimate the current retail float to be around 1.5 - 2 million. If only 50% of retail redeem, that will leave a < 1 million retail float. For such a low-volume stock, a small uptick in volume could easily move the price.

The play

I have warrants. My plan is to hold them and wait to see how many shares get redeemed. If a significant portion of the float gets redeemed, the new low float could generate significant retail interest which could drive up the price of commons and warrants. Because it does not have options, people who would normally trade options would likely gravitate to warrants. If redemption is below 42%, the price of warrants will likely remain stagnant and I will exit my position.

Disclosure: I have a small position—100 warrants at $1.

Disclaimer: I am not a financial advisor and pretty bad at math. Do your own DD.

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4 min

15.00

Target Price

9/ 10

Confidence

1-2 Months

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