A SPAC holds its investors' money in a trust. Before it merges with a target, every public shareholder may ask for that money back at trust value, as long as they ask by a published deadline. The bet was that this deadline creates a burst of price-insensitive selling in the days before it, which a buyer could absorb and then see revert.
forced flow / calendar
SPAC redemption at trust value
The idea
How it was tested
No backtest. The entry test read real merger proxies filed on EDGAR between 2024 and 2026, looking for the clause that makes a shareholder redeem, and for the way redemption actually happens.
Where it died
Rejected on 2026-09-23, on two grounds, each sufficient alone. First, nobody is obliged. The proxies say that a shareholder who wishes to exercise redemption rights must demand them. Redemption is a choice, and a rational one: cash out at a known value. That is the opposite of forced flow.
Second, even an obliged redemption would not move the price. Shares are tendered to the transfer agent and paid from the trust. They are not sold in the market, so there is no trade to push the price anywhere. The mechanism had neither a forced party nor a market transaction.
The record
Thesis
Ahead of a SPAC merger vote, the trust must pay out trust value to every shareholder who elects redemption by a published deadline, which was expected to create price-insensitive selling before that date.
Gates
Entry test — obligationfail
Is someone actually obliged to trade badly here, and unable to stop?
Why it died
Two grounds, each sufficient, found by reading real merger proxies. No obliged party: redemption is elective — "if you are a public shareholder and wish to exercise your redemption rights, you must demand..." — a rational cash-out into a known value, the opposite of forced flow. And the wrong shape even if it were obliged: shares are tendered to the transfer agent for cash from the trust, not sold in the market, so there is no transaction to move a price.
What it taught
What actually trades here — buying below trust value and redeeming — is a well-known carry trade bounded by SPAC supply, not a forced-flow edge, and the SPAC universe has shrunk sharply since 2022-2023.
Verdict history
- 2026-09-23Rejected at the entry test — redemption is elective and off-market Rejected before testing