Here's Why Chamath Sold Some SPCE And Believes In CLOV, SPACs

One of the most polarizing figures in the SPAC investing world has been Chamath Palihapitiya. The noted investor and Social Capital CEO has brought 10 SPACs to market and closed four deals along with investing in the PIPEs for others.

Chamath on SPACs: After seeing significant interest and valuation for SPAC deals, the investment vehicle has fallen out of favor for many investors and prompted questions of a bubble.

“I do think that in the beginning of every market you have a few people that pioneer something and then you have a lot of fast followers,” Palihapitiya said at CNBC’s Delivering Alpha Conference Wednesday.

Palihapitiya believes we are in a “sorting out” phase when investors separate “the wheat from the chaff.”

Investors will look to find quality sponsors, good underwriters and SPAC leaders with “skin in the game.”

Palihapitiya also cautioned judging the entire SPAC industry now and giving it time.

Related Link: SPAC King Palihapitiya Who Once Warned Against Selling Tesla Stock Has Exited Position In EV Maker 

Chamath On CLOV: Palihapitiya has faced criticism for several of his SPACs that have seen shares trade down significantly from highs over the last year.

CNBC host Scott Wapner asked Palihapitiya if he regretted doing any of his SPAC deals.

“I’m really proud of them,” Palihapitiya said, noting he has no regrets.

Palihapitiya highlighted Clover Health Investments Corp CLOV, which has seen shares start the year over $16 and fall to under $8 since then.

Despite the shares dropping, he said “Clover had an incredible quarter, crushed their numbers.”

Palihapitiya said he is proud of Clover Health helping make healthcare more accessible for minorities. The company is seeing its footprint grow for where they can operate while competitors are being investigated for Medicare fraud.

The investors said he was straightforward and honest about his investment in Clover and knew of a letter the company had received from the Department of Justice.

Palihapitiya said there is no fraud with the company and credits short sellers with spreading misinformation.

“I find it curious that we don’t look at that more,” Palihapitiya said of short selling. “It’s about creating sentiment shift and volatility, then profiting from that.”

Palihapitiya said he would love for someone to look into whether short selling should be allowed or not.

Chamath on SPCE: Earlier this year, it was widely reported that Palihapitiya sold a large position in Virgin Galactic Inc SPCE.

“I generated some liquidity to manage my risk and then to be able to make a big investment in climate change. It was misreported,” Palihapitiya said.

The investor said he still owns a “lot” of Virgin Galactic. Palihapitiya is also the chairman of the board of this space tourism company.

Disclosure: Author is long SPCE shares.

Photo: View from Space on Virgin Galactic's First Spaceflight, courtesy Virgin Galactic