American investment legend Warren Buffett described the Spac boom as a “killer” while criticizing greedy City advisers
American investor Warren Buffett described the plumber’s boom as a “killer” as he criticized greedy city advisers.
The 90-year-old became the last to criticize Spacs – or special purpose buyouts – at his Berkshire Hathaway weekend shareholder meeting.
Spacs, also known as “blank check companies”, are blank companies that are listed on the stock market, and bring together millions of investors with the purpose of buying an existing company.
Raising concerns: Warren Buffett has become the latest critic of special purpose buyouts
It is usually led by a prominent investor, and it has gained increasing popularity in the wake of the pandemic.
It’s “ a killer, ” Buffett said, explaining that the amount of money transferred to Spacs means they now have an advantage over companies like his own when making deals.
Buffett’s right-hand man Charlie Munger said many of the city companies and high-profile investors who launched Spacs aren’t buying the companies because it’s a good investment. They buy it because the counselor gets paid. Of course, the more you get, the more ridiculous your civilization is. ‘
Munger said the boom also indicated a “moral failure” because Citi’s advisors were making “easy money”.
He added, “I think we have a lot to be ashamed of in the current circumstances.”