Hedge Fund Sells Trump SPAC stake to DWAC after news of merger

The social media app will be developed by Trump Media and Technology Group (TMTG).

Raphael Enrique | LightRocket | Getty Images

At least one hedge fund sold its stake in SPAC after the firm announced plans to merge with a social media company planned by former President Donald Trump.

Lighthouse Investment Partners, one of at least nine hedge funds holding stakes in SPAC, pulled out of the Digital World Acquisition after learning of the merger, CNBC said Friday.

“Lighthouse was unaware of the upcoming merger and no longer owns unlimited SPAC shares,” the fund said.

According to regulatory filings dated September 30, Lighthouse owned 3.2 million shares, or 11.2% of SPAC.

The sale took place on Thursday following news of the Digital World Acquisition Corp. merger. the price of its shares rose sharply.

DWAC shares rose more than 100% on Friday after the stock more than quadrupled in value in the previous session.

It is unclear whether the hedge fund sold its stake in DWAC to lock in profits, or whether it was concerned about the risk of being linked to Trump, who was twice impeached as president and accused of inciting a deadly Capitol riot on January 6. his supporters.

DE Shaw owned 8% of SPAC, or 2.4 million shares, while ARC Capital owned about 18%, or 6.6 million shares, according to regulations. Saba Capital Management, Highbridge Capital Management, Lighthouse Investment Partners, K2 Principal Fund, Atw Spac Management, Boothbay Fund Management and RG Capital Management were also major early investors in SPAC.

DWAC hedge fund holdings were based on regulations filed in September prior to the announcement of the merger target and do not necessarily represent their interests at this time.

Highbridge Capital Management and Atw Spac Management declined to comment, and other hedge funds did not immediately respond to CNBC’s requests for comment.

One of the main investors in DWAC is ARC Global Investments II, LLC. The Managing Member of ARC Global is listed in the regulatory filing as Patrick Orlando, who is also the CEO of DWAC.

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On Thursday, in an 8-K filing with the Securities and Exchange Commission, DWAC said it had entered into an agreement and merger plan with DWAC Merger Sub Inc., a 100 percent subsidiary of DWAC, and Trump Media & Technology. Group and ARC Global Investments II.

SPACs are Special Purpose Acquisition Companies, also known as Blank Check Companies, which are set up to raise capital from public stock markets and then use that funds to merge with a private company that has or will do real business.

This combined firm will then trade under a stock ticker created by SPAC.

Investors in SPAC generally do not know the identity of the other firm that will be the target of the merger.

Trump’s company, still unlaunched by Trump Media & Technology Group, said in Wednesday’s announcement that his “mission is to create a rival to the liberal media consortium and to fend off Silicon Valley’s big tech companies that have used their unilateral power to silence opposition voices in America.”

Earlier this year, Trump was blocked by Twitter, his favorite social media platform, and Facebook, after being accused of inciting the Capitol invasion.

This is the latest news. Keep for updates.

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