Buying stock at an initial public offering is an act of faith, but investing in so-called "blank check" companies, startups with no operating assets (and no guarantee they will find any), products, or staff, is an act of blind faith.

A blank-check company is created with the sole purpose of acquiring an operating business with shareholders' money. Commonly known as SPACs (special-purpose acquisition companies), blank-checks are essentially empty shells hoping to buy an as-yet-unknown business with the proceeds from their initial public offerings of shares.

The ultimate roll-of-the-dice investments, they go public with little more to show investors than a management team and a promise that the capital raised will be used to make acquisitions in a particular market sector, such as oil and gas, or in an emerging economy like India.

In the bull market of the 1980s, a flood of these IPOs sprang up. Plagued by a rash of scams, they are remembered by many investors as dubious setups exploited by con artists who took shell companies public, announced mergers, pumped the stocks, and then quickly dumped them before anyone realized that the hot target firm wasn't what is was cracked up to be. The SEC finally tightened regulations and put an end to a flurry of questionable deals.

After being largely abandoned for almost two decades, it seems, blank-check companies are all the rage again. In 2004, 13 of them went public, raising a total of $483.6 million, growing to 30 in 2005 and 40 last year, raising $2.1 billion and $3.4 billion, respectively, according to Dealogic, the investment banking research firm. A record 17 of them went public in the first quarter of this year, a further testament to their ever-increasing popularity.

As their numbers continue to grow, so too is their credibility. Some of these new corporations are backed by high-profile managers, who sign on to lend their reputations and expertise. Investors are betting on the credibility of the people behind the venture, so the value of big-name-dropping can't be underestimated. Case in point: Name-brand executives and political powerhouses, including Apple's co-founder Steve Wozniak and former undersecretary of the Department of Homeland Security Asa Hutchinson, have appeared as the top brass on the management rosters of blank-check IPOs.

Investing in these companies amounts to a vote of confidence in the judgment of their management, who essentially have a "blank check" to spend as they see fit. Though the companies are usually structured to require that an acquisition target must be approved by a majority of shareholders within 18 to 24 months or the company must return its funds to investors, which means quality management is a key ingredient to a successful IPO.

The average size of blank-check deals in the past three months is just over $100 million, with the largest being Stamford, Connecticut-based Information Services Group Inc's IPO, which raised $259 million on the public market. And financial giants like Merrill Lynch, Citigroup and Deutsche Bank have underwritten some of the deals.

Once a deal is done, the company's directors, who routinely receive 20% of the public shares as compensation, are free to liquidate their holdings, usually following a six-month lockup period.

Despite having first-day returns averaging only 0.1%—not a surprise given these companies are not actual businesses—interest in them is at an all-time high. In fact, the growth of the blank-check sector is now surpassing that of the overall IPO market.

The jury is still out on whether blank checks will lose steam anytime soon. So for now, they remain the hottest IPOs and one of the fastest-growing trends on Wall Street.