Legendary investor and Berkshire Hathaway (BRK.A +0.43%) (BRK.B +0.40%) vice chairman Charlie Munger is no fan of special purpose acquisition companies (SPACs), the hottest trend on Wall Street for bringing young companies public.
"The investment banking profession will sell s--- as long as s--- can be sold," the 97-year-old Munger said about SPACs, responding to a question at the Daily Journal Corporation (DJCO 5.95%) annual meeting in Los Angeles on Wednesday.
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SPACs have emerged as a popular way for companies to go public and avoid the normal road-show scrutiny that comes with a more traditional initial public offering. Fans say the process is easier and gives companies greater access to added liquidity, but Munger said he believes it is a way for early-stage investors to cash out of speculative companies using less-sophisticated retail investors.
"I think it must end badly, but I don't know when," he said.
Munger, who is also chairman of the Daily Journal, is known for his candidness. During the meeting, he referenced Warren Buffett's admiration for the banking industry to explain the decision to hold on to Daily Journal's Wells Fargo (WFC +2.19%) stock even as Berkshire Hathaway sold some of its stake.
"You can understand why Warren was disenchanted," Munger said. "I'm a little more tolerant. ... I don't expect as much out of bankers as he does."
Munger also said he was never tempted to buy into General Electric (GE +1.44%), a onetime highflier that nearly collapsed during the financial crisis, because he never liked the culture.
"I was not surprised when it blew up," he said.
