MSTRMicroStrategyBearishMicroStrategyBTCBitcoinBullish(Nuanced)Bitcoin

Today on

Likely MSCI removal and ongoing dilution hurt MSTR long-term; buy BTC directly instead of MSTR

There's a good chance $MSTR is included on the list of MSCI removals published tomorrow, which will go into effect at the end of this month. My take: Usually when something is fairly predictable, the news is already priced in. MSCI finalized its new index eligibility rules on October 15th. The rules now exclude non-operating companies from its indexes. #Bitcoin has steadily bled off since then. Why? If MSTR is removed from MSCI indexes, JPMorgan estimated it could force ~$2.8 billion of selling from MSCI tracking funds. Strategy is the largest public holder of BTC by a wide margin. This obviously brings back the question from this summer of whether this could put Strategy in a position where they're short on cash and forced to sell BTC to cover obligations, since MSTR is their main source of raising funds. Where I believed that was possible this summer, I don't believe it's very likely at all anymore. This summer we were still debating whether or not Strategy would stay true to their guidelines of common shareholder dilution. Since then, they've shown they're willing to change metrics to justify diluting common shareholders in order to raise large sums of capital without selling large amounts of BTC to cover any current or future obligations. I see no reason why that'll change. People believe MSTR is a leveraged bet on BTC, so they'll continue to bet on it as that, and Saylor will continue to be able to print as much money as he needs to cover obligations. So while the news isn't particularly bullish for MSTR from a long-term perspective, I really see it having little fundamental impact on Bitcoin. So buy the fear, and remember: If you're bullish on Bitcoin, just buy Bitcoin.

MSTRMicroStrategyBearishMicroStrategySTRCStrategy PP VariableNeutralStrategy PP VariableBTCBitcoinBearishBitcoin

5d ago on

MSTR is a dividend piggy bank, not Bitcoin exposure; skip it and just buy Bitcoin

There were a plethora of posts on the timeline yesterday celebrating $STRC returning back to par. I still believe Strategy is no longer a Bitcoin company. It's a dividend company. And $MSTR is nothing more than a piggy bank in the ponzi that Saylor uses to fund dividends. Notice how BTC Yield has been down only since June, despite both the reserves and the price of BTC going higher. This was THE metric they used to define success and shareholder value for MSTR... e.g. when they could sell more shares of MSTR to buy more Bitcoin and it be accretive rather than dilutive... until it stopped working. Then they made up a new metric with new numbers for what's actually accretive and dilutive and never mentioned it again. They currently have ~$4.9B of cash in their reserves. How did they get it? - primarily by selling billions of dollars of MSTR atm while it was still dilutive to shareholders And remember, they've also REPURCHASED $2B of STRC while it was at a discount. I actually think that's smart! But, remember the preferred stock is what got them into this mess in the first place... And now that it's back to par, they're simply going to add back to the debt by issuing more STRC to buy more Bitcoin which adds back to the dividends, obligations, ad infintum. Not to mention, there's a big chance $MSTR itself is about to see billions of dollars in sell pressure if its removed from MSCI indices. While I don't see there being a situation anywhere in the near term they'll be forced to sell their entire Bitcoin stack if the price goes low enough, I do think it's obvious they've shown they care much more about protecting the dividend than they do preserving accrual of BTC for the average shareholder... which is what the initial purpose of the company was supposed to be. So I still encourage anyone who buys MSTR because they're bullish on Bitcoin to reconsider. If you're bullish on Bitcoin, don't buy a stock that can be printed infinitely to pay someone else. Just buy more Bitcoin.