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Dear Mr. Berko: I鈥檓 close to retirement and my $400,000 IRA didn鈥檛 do well under my previous broker. Over the last 11 years, it鈥檚 averaged 7.23 percent. I asked him to be more aggressive, and it鈥檚 just not his style. So I moved to another firm, using a broker I鈥檝e known for 20 years who told me he鈥檚 had good results with blank check companies or special purpose acquisition companies. He wants me to invest 25 percent of my IRA in them so he can 鈥渃herry pick鈥� the issues. My wife is against it, but I鈥檓 convinced this broker鈥檚 smart, and in the past six years, he says, he has earned a 16.7 percent return. What do you think?

Also, last December I bought 300 shares of Elanco Animal Health at $30.50, and in a strong market it鈥檚 only $32. I鈥檓 thinking of selling, but my wife says we should buy 300 more shares. Your advice would be appreciated.

L.B.

Cleveland

Dear L.B.: Your wife鈥檚 a smart lady and certainly smarter than you. I don鈥檛 believe the story about a 16.7 percent return. This 鈥渂rokster鈥� sounds like the type of guy who breaks into funeral homes at night to collect body parts. Listen to your lady, Larry!

There are very fine investments, and there are many OK investments. There are also very bad investments, and there are investments that are absurd, stupid and brainless. They鈥檙e called blank check companies or special purpose acquisition companies (SPACs), and I wouldn鈥檛 go near one with a sound wave. They were popular before the financial crisis, and the concept is now enjoying a successful comeback.

These dreadfully speculative investments are sold only to slow-witted, dippy investors who are still riding turnip trucks. Because SPACs are enjoying enormous popularity, they鈥檝e raised $16 billion in new money since 2010, thanks to sundry odious broksters who鈥檇 steal pennies off their dead mother鈥檚 eyes. On average, SPAC IPOs raised about $254 million each, held in escrow 鈥檛il a deal is done. These companies have neither assets nor operating history and are basically blind bets (therefore, 鈥渂lank check鈥�) based upon a management team鈥檚 ability to use the escrow funds to make profitable deals.

It鈥檚 customary for SPACs to price their IPOs at $10 a share, which is convertible into the target company鈥檚 shares, usually on a share-for-share basis. If the funds are not spent within a year, the shareholder can request his money back. In some instances, the shareholder can request a refund if he doesn鈥檛 like the targeted company.

Most SPACs have underperformed the market for years, and many still trade below $10. There are 110 SPACs trading on NASDAQ and seven on the NYSE; however, most investors are not happy campers, because 70 percent of them trade below their IPO price.

Elanco Animal Health (ELAN-$31), spun off by Lilly in September 2018, provides products for companion and food animals. It鈥檚 the fourth-largest animal health care company in the world. Elanco management believes 2019 will produce revenues of $3.2 billion and earn $1.10 a share. And if management gets its ducklings in order, 2020 could record $3.4 billion with earnings of $1.30 a share.

Elanco sells parasiticidal products, pain therapies, vaccines, enzymes and antibiotics as well as a range of food products and arthritis, heart and dermatology applications. Excellent management tripled revenues in the past nine years. Elanco has a big pipeline, with 36 new products to be launched by 2022.

Argus has a good report on Elanco, believing management can produce a five-year earnings growth rate of 12 percent! Some observers think that鈥檚 too conservative because most Americans would forgo a new tattoo to pay a vet鈥檚 bill. Argus has a $37 target this year, suggesting a 17 percent growth rate from the current price. The shares haven鈥檛 performed well since the spin-off, but some growing pains are expected for a stand-alone company.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or email him at [email protected]. 漏 2019 Andrews McMeel Syndication