Trends Watch: SPAC Arbitrage Investing

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Louis Camhi, CIO, RLH Capital.   

What is your outlook for SPAC arbitrage investing? 

I’m very optimistic about the next 12 months for our strategy. The current market environment creates a favorable setup for SPAC arbitrage regardless of where volatility goes from here. If volatility remains elevated, the defensive characteristics of SPACs—principal protection, short duration, and embedded optionality—should shine. If volatility subsides and capital markets activity picks up—as many expect heading into 2025—SPACs may reassert themselves as a viable path to going public, alongside IPOs and direct listings. Either outcome presents a tailwind for the strategy, though I’d certainly welcome a more stable backdrop. 

SPAC arbitrage continues to deliver attractive, low-volatility, uncorrelated risk-adjusted returns. At its core, it’s a yield-enhancement strategy: Investors gain exposure to Treasuries, albeit at yields above investment grade credit, with a built-in option should a compelling deal be announced. That asymmetry remains especially compelling in today’s rate environment. 

Despite persistent misconceptions, SPAC issuance has proven resilient. Over the past 10 months, more than $10 billion has been raised through new SPAC IPOs, signaling continued support from sponsors and institutional investors. Notably, the quality of issuance has improved—better-aligned incentives, experienced sponsors, and tighter deal structures. 

Where do you see the greatest opportunities and why? 

One of the most compelling opportunities today lies in providing bridge financing to companies pursuing SPAC transactions. It’s a contrarian strategy, which historically is where outsized alpha tends to be found when executed well. 

There’s a noticeable capital void during the de-SPAC process. While many investors are comfortable engaging either before a SPAC is announced or after the merger is completed, the six-to-nine-month transaction window is often overlooked—leaving companies in need of flexible, informed capital. That gap creates a unique opportunity for those embedded in the ecosystem. 

What are the greatest challenges you face and why? 

The greatest challenge is shifting the perception around SPACs. For many investors, the term still triggers skepticism—driven by a combination of misunderstanding and persistent negative media coverage. What’s often missed is the distinction between SPACs and de-SPACs. Most criticism is aimed at the latter—post-merger operating companies—which, along with small-cap equities more broadly, have struggled in recent years. 

It’s important to reframe the narrative: SPACs are simply a tool to take companies public, just like IPOs or direct listings. When capital markets are open and quality businesses are going public, all three structures should thrive. The challenge lies in helping investors separate signals from noise—and recognize the opportunity for what it truly is. 

What keeps you up at night? 

This is one of my favorite questions—I used to ask it all the time as a fundamental analyst, so it’s a full-circle moment to be on the receiving end. 

What keeps me up at night is the risk that misconceptions around SPACs could lead to poorly designed regulatory changes. Take, for example, the scrutiny over SPACs publishing financial forecasts. Many of those forecasts were missed, and the criticism is warranted. But what’s often overlooked is that traditional IPOs involve forecasts too. Underwriters build forward-looking models with input from management, which are then shared with institutional investors—while retail investors are excluded from that information. 

I’m strongly in favor of regulation that promotes transparency and levels the playing field. But if policy decisions are driven by perception rather than substance, we risk discouraging innovation and harming access to capital—particularly for retail investors and earlier-stage companies. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.