'A self-parody of a SPAC': The mysterious $100 million New Jersey deli is actually an investment vehicle backed by a firm in Hong Kong

• The $100 million deli that was highlighted in famed investor David Einhorn's letter to clients earlier this month is actually seeking to strike a deal.
• A Hong Kong-based firm that is invested in Hometown International views the company as a "mini-SPAC," seeking a merger worth up to $600 million.
• The multibillion-dollar endowments of Duke and Vanderbilt also own a slice of the deli, according to a Financial Times report.
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The $100 million deli called out as an example of froth in the stock market by Greenlight Capital's David Einhorn earlier this month is more than just a deli.

According to a Financial Times report, the deli's parent company Hometown International is actually a "mini-SPAC" that is ultimately seeking to make a deal that could be worth up to $600 million while it slings Philly cheesesteaks from its single New Jersey-based location.

"[This] is a self-parody of a SPAC, and that is what I would expect at the end of a bubble," Columbia University law professor John Coffee told the Financial Times.

The deli, which has been thinly traded on the over the counter exchange since 2015, is partially owned by Hong Kong-based Maso Capital. Through Maso, the multibillion dollar endowments of Vanderbilt and Duke University have invested a total of about $2 million into Hometown International, according to the report.

Hometown told investors that it plans to use its remaining cash to fund a business acquisition.

"We will not restrict our potential candidate target companies to any specific business, industry or geographical location," it said.

That's SPAC-talk for "we are shopping for any potential deal with our cash." At the end of the day, Hometown International is a shell company that hopes to execute a reverse merger with a larger, more successful private company, but also happens to operate an actual deli in the meantime.

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Maso Capital's co-chief investment officer Manoj Jain told the Financial Times that Hometown International is targeting a deal that would be worth between $300 million and $600 million, and that its OTC structure will save it millions of dollars, given how costly setting up an actual SPAC investment vehicle can be.

"[Hometown] is a more flexible structure...with a longer time to find a target, and a better economic uplift," Jain said. Most SPAC vehicles only give the managers two years to locate and execute a deal, or else they are required to return investors money. A corporate shell that is seeking a reverse merger has no such time requirement.

"It works like a mini-SPAC. When you execute the merger, the name changes, the ticker changes, the board changes, the management changes, everything changes, as the merged entity enters the US capital market," Jain explained.

But executing a merger deal might be harder for Hometown International, due to the increased media attention and the OTC's decision to delist the stock last week. Still, that hasn't hurt shares of the deli, which traded near record highs at $12.55 as of Friday afternoon.