Evanston, IL-based hedge fund Magnetar Financial LLC, its CEO Alec L. Litowitz, Supernova Management and other related entities disclosed a 8.69% ownership in Churchill Capital Corp IV (NYSE:CCIV) a special purpose acquisition company (SPAC) in a February 12 SEC filing.
The hedge fund acquired 17,892,000 shares in CCIV stock which makes them biggest institutional investor so far. There were approximately 207,000,000 CCIV shares outstanding as of November 9, 2020.
This SEC report shows a change that happened in quarter ending December 31, but companies are not obliged to report the ownership as it happens.
As of December 31, 2020, each of Magnetar Financial, Magnetar Capital Partners, Supernova Management and Mr. Litowitz held 17,982,000 CCIV shares.
According to NASA, Magnetars are neutron stars “known to erupt without warning, some for hours and others for months, before dimming and disappearing again.”
Magnetar, the hedge fund, came under the spotlight in 2008 during the housing bubble.
The Magnetar Trade worked this way: The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations — CDOs. If housing prices kept rising, this would provide a solid return for many years. But that’s not what hedge funds are after. They want outsized gains, the sooner the better, and Magnetar set itself up for a huge win: It placed bets that portions of its own deals would fail.source
So, Magnetar was investing in the riskiest CDOs out there making the investments more vulnerable to failure, and then they were placing bets against its own deals, basically shorting their positions.
Now they are back and ready to invest the most promising (?) SPAC deal in 2021. I am sure they know something.