What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing chamath was one of the most famous investors of the 2020 and 2021 era. He first made a name for himself in silicon valley as one of the first employees at facebook. He then ran a venture capital fund called social capital for many years. But what really turned him into a household name was a special purpose: acquisition, companies or spax, which garnered significant interest from individual investors.

So far he has taken four different companies public via spac and has two additional specs, where he is actively looking for a target company to merge with it's been more than two years since his first spag. So he now has built up a track record of performance that we can judge of his four completed specs. Every single one of them has been a loser. All of them started at an initial price of ten dollars.

The best performing one has been sofi, which now sits at nine dollars and 82 cents. The worst performing one is clover health, which now sits at just three dollars and 12 cents at the time of recording this video. When you look at the relative performance. First, the s: p: 500, it's even worse so far, underperformed the s p.

500 by 18. Since the merger was closed, clover health has underperformed by negative 110 as it felt 69. During the same time that the market was up 41, all of his completed specs were done in either 2019 or 2020.. He still has two blank check companies left, but he has failed to find any suitable acquisition targets in the entire year of 2021.

In this video we'll look at why chamos packs were such a disaster and why he still hasn't been able to find targets for his last two, the four stacks that chamoth has taken public. So far, in chronological order are the private space tourism, company virgin galactic, the real estate marketplace, open door, the health insurance company, clover, health and finally, the online personal finance company sofi we'll go over each of them one by one. We've already made a video about the rise and fall of virgin galactic link in the description below the stock. Initially did very well as it received a lot of hype from retail investors.

This is to be expected, as it was the first public pure play space tourism company. Unfortunately, the company has continually delayed the date of their first commercial space flight. Today they have never flown a single paying customer into space and are burning tens of millions of dollars. Every single quarter, if you bought at the initial stack price of 10, you would be down more than twenty percent on your investment by now, but chamath did find for himself as he dumped his entire 200 million dollar personal stake at well over ten dollars per share.

In march of 2021 and stepped down as chairman about a year later, next off, we have open door which merged with chamos back in june of 2020., similar to virgin galactic. It initially did quite well at its peak in february of 2021. It was worth 35 dollars per share, which has more than triple the initial price of ten dollars. Since then, it has fallen almost eighty percent to less than eight dollars per share.

So what is open door open door is a so-called eye. Buyer. If you want to sell your home, you can go to open doors website and they'll. Give you a cash offer within just 48 hours.

They then sell it to a home buyer on their platform. For a markup, the idea is to bypass the lengthy and expensive process of using a traditional real estate agent to buy or sell your home as open door deals directly with the homeowners without the need for a middleman. This can supposedly give a superior value proposition to the consumer as they can save both time and money. The problem is, this is much easier said than done.

Real estate agents know the details and nuances of the local communities that they operate in. They know about the various school districts, the architectural styles of the houses, recent trends in the neighborhood and a whole host of other qualitative factors that determine a home's value beyond just the number of bedrooms and bathrooms. Open door uses artificial intelligence algorithms to predict how much a home is worth and therefore how much they should offer to buy it, for if their artificial intelligence is good, they should be able to give you an offer at almost exactly market price. However, if their artificial intelligence is bad, people with low quality homes will be more likely to sell, as they view opendoor as a dumb buyer and willing to pay the average price.

Even for the worst house in the neighborhood to combat this opendoor would have to charge high fees or give lowball offers to make up the difference on the surface. They look pretty good. They charge a five percent service fee which is slightly lower than the six percent that traditional realtor charges. However, if you look on yelp you'll see that open door only has 3 out of 5 stars.

Many customers complain about the company using bait and switch tactics where they initially give a high offer for a home, but then turn around and deduct an absurd amount of money for repair costs. So you end up getting a worse deal than using a traditional realtor. In a lot of cases, open door was able to grow their revenue tremendously in 2021, more than tripling from 2020.. However, despite giving lowball offers, they were only able to make a nine percent gross margin, which is razor thin.

Also, their success in 2021 can be partially attributed to luck after they buy a home. They hold it on their balance sheet until they can sell it. So at any given time, they're holding billions of dollars of real estate inventory, they got lucky in 2021 as real estate prices appreciated tremendously because they hold so much real estate. They participated in those games.

If we ever see another real estate crash like in 2008. This could be a bankruptcy level event for open door, as investors start to wise up to the fact that the value proposition to consumers is arguably worse than a traditional real estate agent, coupled with the fact that they carry a huge amount of risk on their balance Sheet investors sold the stock down by 78 percent before we go any further. A quick word from our sponsors over at masterworks dot io in 2020 jeff bezos spent over 50 million dollars to buy hurting the world radio by ed russia. There's a growing trend of billionaires.

Investing heavily in contemporary art, thanks to its low correlation with traditional assets and high historical returns, especially during times of high inflation. Masterworks.Io is the only investing platform which allows ordinary investors, like you and me to invest in the same types of art that bezos is buying. There's a link in the description down below that will allow you to skip the wait list just go to your browser and type masterworks dot art wall street, then we'll click, the button that says skip the wait list. You fill in your name and email address to create the account and press request invitations.

You then fill in how much you're planning to invest and when you plan to get started we'll pick immediately, because why wait? You can then schedule a membership interview because masterworks likes to have one-on-one conversations with their investors, where they explain how the platform works. Once your account is approved, you can start buying art, for example. This is a piece from ed ruscha, the same artist that jeff bezos. Recently invested in, you can look at their official document that they use to register the artwork with the sec and the deal sheet, which explains the background of the painting, the artist and the investment rationale.

Once you decide on a painting, you can buy shares which represents fractional ownership in the artwork, so go check out. Masterworks use my link in the description and you'll get to skip the wait list and now back to the video chamas biggest disaster was clover health clover. Health is a health insurance company based in new jersey, which helps administer medicare plans. It was founded all the way back in 2014, but failed to grow meaningfully or generate consistent profits.

Supposedly this would all change with a revolutionary new product called clover. Assistance. Clover assistant is a software which uses machine learning to predict patients. Health needs and give doctors recommendations about what treatments to prescribe this reduces, cost and increases health outcomes.

Everything looked good until a few months later, when the short selling firm, hindenburg research released a damning short report. They exposed that clover is under active investigation from the department of justice according to hindenburg, the investigations revolve around clover using deceptive marketing tactics and more or less scamming. The government by collecting on questionable medicare claims. Hindenburg says that the clover assistant, which was the main bowl case for clover stock, doesn't actually help patients.

It's just a tool that clover can use to report irrelevant medical conditions to the government and charge them higher bills under medicare clover has shown impressive growth over the past couple years, increasing its revenues more than threefold, but is it because their technology is really that good Or is it because they got better at scamming medicare after the investigation was exposed, the stock started free-falling, ultimately losing 70 percent of its value. Its share price of three dollars makes it a penny stock by some definitions. Chamath is currently being sued by clover. Investors who feel that they were defrauded as the active investigation was never disclosed during the spec process.

By all accounts, the clovers pack was a complete disaster, but chamoth and his partners still walked away with more than 20 million free shares of the company. This is for their compensation for sponsoring this bag. Chamoth and his partners invested 171 million dollars to get 17.1 million shares, but they also got 20.5 million shares for free. This gives them an effective cost basis of about four dollars and fifty cents, as it turns out.

Clover's stock price tanked so much that even with this huge advantage, he is still in the red, but this goes to show how skewed spacks are as an individual investor you have to buy in at ten dollars. Chamoth buys in at four dollars and fifty cents. So the stock has to be more than cut in half before he suffers any losses, while the exact terms of each spec are unique. Chamoth always collects free shares as a sponsor.

Now we'll look into his most recent spec, which is sofi similar to his previous three spacks sophie skyrocketed in the months following the merger, but eventually came back down to earth. If you bought in at the beginning price of ten dollars, you would have lost about one percent of your investment, so it wasn't a big loser, but it wasn't a big win either sofi is an all-in-one finance super app. You can apply for mortgages, consolidate your debt, buy insurance, keep track of your spending and invest in the stock market. This idea is to have a one-stop shop for all of your personal finance needs and because they don't have any unnecessary overhead costs like brick and mortar branches, they can offer more competitive rates than traditional banks.

Over the past two years, they've put up impressive growth numbers. More than doubling their revenue, a lot of this growth can be attributed to skyrocketing sales and marketing expenses, which has caused your net losses to widen. Despite the revenue increasing they're, basically using the proceeds, they raised from chamos spec to continue their cash burn and maintain hyper growth. But on the bright side it looks like they do, provide a superior value proposition on the apple app store.

They have a 4.8 out of 5 star rating with over 100 000 reviews. This is orders of magnitude better than the three stars that opendoor has. So, despite the fact that they're burning cash, they probably do have a bright future in front of them and will continue taking market share from traditional banks of all of chamath's facts. Sofi looks like the highest quality business, but even sofi has massively underperformed the s.

P. 500, since its merger, in all fairness to jamaat, he is an early stage. Technology investor and all four of the companies he chose are currently losing money with the fed looking to start raising interest rates, these money losing companies have fallen out of favor with investors. This isn't jamal's fault per se.

He just got unlucky with the timing with that being said, there's no excuse for taking clover health public when they had an active department of justice investigation and failing to inform investors about it. Also virgin galactic's performance is largely the company's own fault they continually over-promise and under-deliver about when they'll have their first commercial spaceflight. You can't blame the fed for these operational failures. Chamath still has two more active space which have yet to declare an acquisition target.

Ipod and ipof for a stack to merge the majority of the shareholders must approve the merger given chamoth's track record so far. It will be very difficult to convince the spac investors to approve the next deal, given how many stacks there have been in the past two years. Most of the good companies have already been taken public, so it's becoming increasingly difficult to find good deals. That's why chemoth had to dumpster dive with clover health.

A few months ago, it was reported that one of his remaining specs was in talks to merge with the luxury gym company equinox equinox is not a technology company. It's just a super luxury gym that rich people use. They ended up not going forward with a deal. It's looking more and more likely that jamal will not be able to find any suitable targets for his remaining two spacks.

If this happens, he will have to dissolve them and return the money to shareholders in 2020 and 2021. Chamoth was one of the most talked about figures in the investing world, especially among individual investors, but with three out of four of his facts being complete disasters. His 15 minutes of fame looks to have finally come to an end, alright guys that wraps it up for this video. What do you think about chamoth spacks? Do you think they will ever go back up to ten dollars? Let us know in the comment section below as always.

Thank you so much for watching and we'll see in the next one wall, street millennial signing out.