Pershing Square Tontine Holdings (PSTH), the massive special purpose acquisition company, or SPAC, run by hedge fund manager Bill Ackman, recently announced the cancellation of its plans to acquire 10% of Universal Music to the disappointment of many investors. In this Fool Live video clip, recorded on July 19, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss whether investors should hold on. 

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Jason Moser: Well, Matt, another story that we've been following here over the last several weeks, and one you've really dug into a good bit and explain very well I might add because it is a complicated story by virtually every angle but this is Bill Ackman, Pershing Square Tontine. We've been talking about this move to acquire 10% of Universal Music through this back offering from Pershing Square. Then we now see that actually, this deal isn't going to happen. It looks like Pershing Square Tontine is dropping this deal to buy 10% of Universal Music. I'm wondering if you could explain the nuts and bolts of what's going on.

Matthew Frankel: Well, I wish they would have looked into whether the SEC would have approved this before they decided to -- I'm disappointed in that, to be honest with you. The whole point of a SPAC is to acquire a full business. To have a business combination.

Moser: Yeah.

Frankel: You can make the argument that acquiring a 10% stake of a music company is not a business combination.

Moser: Yeah.

Frankel: I have the press release in front of me. The SEC's problem, in particular, was whether the structure of this qualified under the rules. They call it the structure of their intended business combination, whether they're qualified. Now I'm kicking myself for spending hours looking through the structure of the deal and trying to understand this thing now that it can't go through. But so what happens now is the question.

Moser: Well, yeah. What does happen now?

Frankel: Now they still have $4 billion of cash sitting there. Pershing Square itself, the hedge fund, not the SPAC, is going to go ahead with the 10% Universal stake. Pershing Square is still buying that. It doesn't help the SPAC investors at all. Now they have $4 billion. They are going to pursue a traditional SPAC business combination, where they actually buy a business. Bill Ackman was on CNBC this morning. One of the biggest obstacles, is also one of the biggest competitive advantages is that this is the biggest SPAC ever. Investing that $4 billion only makes sense with a handful of companies. Remember, we did our fund episode where we named like 20 companies they could buy.

Moser: Sure.

Frankel: I think it was like Chick-fil-A was one of them. Subway was one, things like that.

Moser: Yeah.

Frankel: That's also a big limiting factor. But he said that's not necessarily a limitation. They could acquire a smaller company and pay a dividend to shareholders with whatever is left if they wanted to do it that way. But now they still have 18 months left on the clock to execute a business combination. He made the point on CNBC this morning that they are not starting from zero. Before they settled on the Universal deal, they had discussions with a lot of other companies, so they can just as easily pick those discussions back up if they want to. He said they're getting into this with a running start. Not terribly worried about it, I'm holding onto my shares because they're pretty much not trading at much of a premium. They have $20 per share in cash sitting in that account, and I think it was trading for $20.50 last I lookec. It's approaching a floor. That $20 creates a price floor because that's cash sitting in an account. I'm holding onto mine, I'm optimistic, I'm disappointed, I'm not going to say I'm not. I thought this was a done deal that would have a really good long-term structure, which I still think it would have been. But obviously the SEC said, this is not what SPACs are for. You're pushing it Bill Ackman. It's kind of what they're saying there. You're pushing the limits a little too far.