We don’t know these people and we are not vouching for their work or conclusions, but they are holding the right hot poker that is pointed in the right steaming mess of conflicts, aspirations, and likely borderline fraud that is occurring daily in SPAC world. Two years to close a deal is arguably the worst incentive to close a deal ever invented. This world is a future opportunity zone for us..post-crash.

Highlights below. Read the full report.

PureCycle: The Latest Zero-Revenue ESG SPAC Charade, Sponsored By The Worst Of Wall Street

(NASDAQ:PCT)

• PureCycle is the latest zero-revenue, ESG-themed SPAC taken public with a bold story about how it will someday revolutionize the plastics recycling industry.
• The company’s insiders and SPAC sponsors do not seem inclined to wait to see how its claims will work out: they’ve collectively positioned themselves to clear ~$90 million in cash and tradable shares before the company generates a single dime in revenue.
• PureCycle’s Chairman/CEO and other associated executives collectively took 6 companies public prior to PureCycle. All have failed, resulting in 2 bankruptcies, 3 delistings, and 1 acquisition after a ~95% decline. Over $760 million in public shareholder capital was incinerated in the process.
• We spoke with multiple former employees of these earlier failed companies, who said PureCycle’s executives based their financial projections on “wild ass guessing”, brought companies public far too early, and had deceived investors.
• PureCycle executives have already begun to cash out, receiving $7 million in cash bonuses for simply closing the SPAC deal, and are slated to receive ~$40 million in compensation before any revenue is generated.
• PureCycle’s SPAC sponsors are two investment banks, Roth Capital and Craig Hallum Capital, who collectively received ~2 million ‘founders’ shares for a little more than a penny per share, worth about $48 million at today’s share price.
• Roth has an odious reputation and is well-known for having brought numerous Chinese companies public on U.S. exchanges that later imploded after fraud allegations. Roth facilitated several of these IPOs, issued “buy” ratings on the companies through its research department, then left public investors holding the proverbial bag. Its activities earned the bank a prominent role in the documentary “The China Hustle”.
• Roth and Craig Hallum are the only investment banks that have issued research on PureCycle. Both have “Buy” ratings with targets between $45-$48. Two partners in Craig Hallum’s “research” division received founders shares for ~1 penny per share, including the company’s Co-Director of Research.
• Unlike in traditional IPOs, where dealrunners must observe a “quiet period” before commenting publicly on a new issue, Craig Hallum’s research department issued a “Buy” rating the very day of PureCycle’s SPAC merger, sending shares surging.
• Many leading plastics companies publish peer reviewed studies that detail their advancements in the field. Contrary to that norm, we were unable to find a single peer reviewed study in any scholarly journal citing or reviewing PureCycle’s licensed process.
• We spoke with multiple competitors and industry experts who explained that PureCycle faces steep competition for high quality feedstock, and called the company’s financial projections into question.
• We consulted with a 30-year expert on polymers, with a background in advanced plastics recycling. He told us the company’s patent is “indirect”, “vague” and a “regurgitation” of prior art.
• Our expert also referred to the company’s flammable pressurized process as a “bomb” and warned about the company forging ahead to commercial scale despite still having issues at a lab scale.
• In our opinion, PureCycle represents the worst qualities of the SPAC boom; another quintessential example of how executives and SPAC sponsors enrich themselves while hoisting unproven technology and ridiculous financial projections onto the public markets, leaving retail investors to face the ultimate consequences.