My Top SPAC Play for 2021

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It is that time of year when we try to predict what stocks will perform the best in the 12 months ahead. While this isn’t my preferred way to approach the market (and others agree with me), it is helpful to identify stocks with strong potential to put on your watch list and aggressively trade as technical conditions develop.

First up is my top play in the SPAC sector.

There is concern that SPACs have become a frenzy and that the sector will be disappointing going forward, but there will likely be some standout plays. The quality of SPAC deals varies widely, and there will be many names with great fundamentals and valuations that will perform well regardless of what the overall sector might do.

While there are likely to be SPAC names that make bigger moves, I believe that Foley Trasimene Acquisition II (BFT) has the best chance of solid performance in 2021.

BFT is a SPAC formed in October by Bill Foley. Foley has been involved in more than 100 acquisitions and many spinoffs. His success stories include Fidelity & Guaranty Life, which he took over in 1984 and made into a Fortune 500 company, Black Knight, Dun & Bradstreet, and Foley Family Wines.

On Dec. 7, it was announced that BFT had signed a definitive agreement and plan of merger with Paysafe Group, an integrated payments platform. Upon closing of the transaction, the newly combined company will operate as Paysafe and plans to list on the New York Stock Exchange under the symbol PSFE.

The transaction reflects an implied pro-forma enterprise value for Paysafe of approximately $9 billion. Paysafe operates a payments platform with a two-sided consumer and merchant network, whose core purpose is to enable businesses and consumers to connect and transact through payment processing, digital wallet, and online cash solutions.

Existing Paysafe equity holders, including Blackstone (BX) , CVC, and management, will remain the largest investors in the company. The transaction is expected to close in the first half of 2021. A complete investor presentation can be found here.

The great appeal here is the payment platform sector. There are currently two main competitors — Square (SQ) and PayPal (PYPL) . As the Paysafe story becomes more widely understood, it should attract additional interest.

I have a core position and will be looking to build it as the chart develops further.

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