Fortress Value Acquisition Corporation - Social Capital

Investor: Chamath Palihapitiya

Type of Investment: 💹Public Equity

Context

U.S. rare earths miner MP Materials to go public in $1.47 billion deal

(Reuters) - U.S. rare earths miner MP Materials will go public in a $1.47 billion deal by merging with a private-equity backed blank-check company, underscoring Wall Street's rising interest in efforts to boost production of the strategic minerals. The listing on the New York Stock Exchange would be the first for a U.S.

mobile.reuters.com

Note

Below, you see that Chamath invested into a publicly listed company called Fortress Value Acquisition Corporation or $FVAC. However, $FVAC is not the rare earths mine seen above. $FVAC is a special purpose acquisition company (SPAC) which basically means it's a shell of a company who's purpose is to raise money via an IPO and then merge with or acquire an actual company. This sort of thing has been done for a while now.

The Memo

Key Takeaways

• Pay attention to political news because changes in policy and international relations can quickly create and destroy opportunity.
• Public equity investments are much heavier on the financial analysis, so it's important to build your sense of certain benchmarks (i.e. what's a good revenue multiple, what are good margins, etc.)
• You need to be diligent in exploring different sectors and aggressively learning. Rare earth mining is so random, yet the current landscape created a perfect opportunity.
• Porter's Five Forces is a great way to look at a highly fragmented and competitive market and find opportunity. Battery technology is very competitive, but their suppliers aren't.

Learnings: How to Write a Memo

highlight how they wrote the memo (format, order, story, structure, etc...)