Chamath Palihapitiya knows true American exceptionalism

Shuli Ren, Bloomberg

Chamath Palihapitiya, the one-time king of SPACs, is back. And as usual, the co-host of the All-In podcast is not sugar coating his words.

The former Facebook executive returned to the blank-check space two months after asking people on X if he should (more than 70% voted no). He filed for a $250 million initial public offering, calling his latest SPAC American Exceptionalism Acquisition Corp. A. He will target the hottest and riskiest corners of the economy.

Retail investors should stay away unless they are ready to lose their shirts. “If they do lose their entire capital, they will embody the adage from President Trump that there can be ‘no crying in the casino,’” Palihapitiya warned in the prospectus.

Buying into blank-check companies is certainly a gamble. Nicknamed “poor man’s private equity,” retail investors need to have faith in the financiers sponsoring these vehicles, trusting that they can acquire good companies at great prices. SPAC sponsors, for their part, often turn to speculative sectors to keep investors interested and deter them from selling their shares early.

But this year’s SPAC revival, as opposed to the frenzy in 2021, resembles even more of a casino. The house always wins — and the dealmakers with direct connections to President Donald Trump’s White House are proving to be the biggest victors.

Cantor Equity Partners, an affiliate of Cantor Fitzgerald LP and run by Brandon Lutnick, the son of Commerce Secretary Howard Lutnick, has emerged as a big presence. In April, its first SPAC announced a merger with Twenty One Capital, whose entire business is to buy Bitcoin. Investors got excited, because Twenty One’s biggest shareholder is Tether, the world’s largest stablecoin issuer, which in turn contributed billions of dollars worth of the cryptocurrency to the new company.

Tether, long the target of official scrutiny over the use of its tokens by criminals and terrorists, has a close relationship with Cantor. In December, Tether plowed $775 million into a right-wing social media company in which both the commerce secretary and Trump’s AI and crypto czar David Sacks — and Palihapitiya’s podcast co-host — owned shares. The younger Lutnick had made the introduction. Cantor Equity Partners Inc., in turn, is up more than 140% from its IPO last July, by far the best performer among the 88 SPACs whose acquisition deals are still pending, according to data compiled by Bloomberg.

With his father now in the Trump administration, the younger Lutnick has become a superstar among SPAC lovers. He has raised $916 million via three blank-check companies this year, and filed for a fourth last week, seeking $200 million.

But looking at the Lutnick family’s track record, they are not great deal hunters. CF Acquisition, led by the commerce secretary, has issued nine blank-check companies. The eighth, which merged with process automation firm XBP Europe Inc. in 2023, has fallen 94% from the $10 offer price, while the sixth is down 23% after combining with video platform Rumble Inc. in 2022.

Except for the very audacious activists, outside investors prefer to align themselves with majority shareholders, trusting they will benefit while the big guys take care of their own interests. Alas, the Trump White House is taking this concept to a whole new level. Compared to 2021, when abundant liquidity drove the frenzy, this year’s blank-check revival tells a new story: The MAGA bros are not shy about boasting about American exceptionalism — and making money off their new-found power.

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Courtesy Bloomberg/Shuli Ren