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Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ - page 41. (Read 14269 times)

legendary
Activity: 2044
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For sure I wouldn't do that to brag about it, being a "value investor".
Yeah, value investor my ass--at least Miller isn't being one in this case:



Note the P/E of 5048.  Usually, value investors don't chase stocks with P/E's as high as that.  Warren Buffet probably hasn't purchased a stock with a P/E higher than 18.  So yeah, MSTR is massively overvalued--even more so than the rest of the stock market right now.

Also, it's no wonder Miller didn't buy MSTR stock outright.  There aren't that many shares outstanding relative to other companies.

Miller bought MSTR debt, not the stock.  PE ratio is not a metric relevant to valuing a bond investment.  Interesting what he said:  "So, when MicroStrategy issued the bond at par, in our assessment there was very little downside and an almost-free call option on Bitcoin."  It's about bitcoin exposure.  Also, PE ratio doesn't take into account unrealized gains, and the appreciation of the bitcoin holdings is what's driving MSTR's performance right now, not the value of its legacy business which is where the PE ratio comes from.  I'm sure if you measure price to book value you get a much more reasonable valuation growth metric than by using PE, as this metric would take into account the unrealized gains, not the profit of the legacy business.
legendary
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A couple of very interesting tweet from Micheal Saylor:

Michael Saylor (@michael_saylor) Tweeted:
Quote
MicroStrategy is not an investment company (IC) per the 1940 Investment Co. Act.  An IC is a co. that invests ≥ 40% of assets (less cash & govt securities) in “securities”.  Per the SEC, #BTC isn’t a security.   Ergo, holding BTC doesn’t cause MicroStrategy to become an IC.
https://twitter.com/michael_saylor/status/1337556620839165952?s=20

Quote
MicroStrategy is not an ETF/ETP.  ETFs & ETPs exist to invest in stocks, bonds or commodities – they’re investment companies per ’40 Act. Like Apple & Microsoft, MicroStrategy is an operating company traded on a stock exchange. We just happen to hold BTC in our treasury reserves.
https://twitter.com/michael_saylor/status/1337556890742624259?s=20

This is a weird statement in my opinion. Who is the recipient of this message? The public? The regulators?

Oh, speaking of regulators: they are a weird bunch of people.

Quote
Regulators be like...


https://twitter.com/gaborgurbacs/status/1336096995287715840?s=20

I think MicroStrategy is walking on a fine line. I don’t know if the first action will be taken by regulators of the shareholders, even assuming they can do anything with the 33% of voting powers.

Anyway it will be interesting when BTC moons and the total BTC investment will be more than 40% of total assets.



On this last point, Saylor is saying that because Bitcoin isn't a "security," MicroStrategy can never be an "investment company" no matter if it breaches 40% threshold or not. He's making an argument on the technical definitions under the Investment Company Act. I agree with him here. Security is a specific definition and the Supreme Court has even ruled on the test for what is and isn't a security, and Bitcoin doesn't fit the definition.
legendary
Activity: 1316
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Even if you buy Italian bonds you may be happy knowing that Italy is one of the top gold owners in the world: that does not mean that you have some guarantees that Italy is economically and financially sound because their ass is backed by tonnes of gold.  Wink

Doesn't mean much when their debt vs. GDP is ranked 3rd worst in the world. There is no comparing Microstrategy's financials with Italy's. Cheesy

Microstrategy had a healthy balance sheet before they started buying BTC. I'm looking forward to seeing their annual and Q1 reports to see how much it's improved since then.
Fair enough.  Smiley
I was only trying to find an analogy and it looks like I failed miserably  Grin
The only point which can be retained is that, at least, there is something valuable that can be sold for a profit even if things go very bad. But, as you said, I would not compare the two again.
hero member
Activity: 2100
Merit: 813
Yeah, value investor my ass--at least Miller isn't being one in this case:



Note the P/E of 5048.  Usually, value investors don't chase stocks with P/E's as high as that.  Warren Buffet probably hasn't purchased a stock with a P/E higher than 18.  So yeah, MSTR is massively overvalued--even more so than the rest of the stock market right now.

in all fairness, their assets (bitcoin holdings) represent intrinsic value, and that is being reflected in the share price---just like it would be in a bitcoin ETF.

those holdings aren't reflected in earnings, obviously. any public company that invests in bitcoin is going to have the same skewed P/E dynamics. if bitcoin treasuries become commonplace, we're gonna have to rethink the usefulness of P/E.


Yeah this is exactly right.

The money Microstrategy is and will be holding thanks to their move into Bitcoin is going to be massively more than just what you would see based off earnings, so P/E doesn't tell the whole story obviously. The company is worth far more than earnings suggest because they have billions of $ worth of Bitcoin.
legendary
Activity: 1806
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Even if you buy Italian bonds you may be happy knowing that Italy is one of the top gold owners in the world: that does not mean that you have some guarantees that Italy is economically and financially sound because their ass is backed by tonnes of gold.  Wink

Doesn't mean much when their debt vs. GDP is ranked 3rd worst in the world. There is no comparing Microstrategy's financials with Italy's. Cheesy

Microstrategy had a healthy balance sheet before they started buying BTC. I'm looking forward to seeing their annual and Q1 reports to see how much it's improved since then.
legendary
Activity: 1316
Merit: 1481
Yeah, value investor my ass--at least Miller isn't being one in this case:



Note the P/E of 5048.  Usually, value investors don't chase stocks with P/E's as high as that.  Warren Buffet probably hasn't purchased a stock with a P/E higher than 18.  So yeah, MSTR is massively overvalued--even more so than the rest of the stock market right now.

in all fairness, their assets (bitcoin holdings) represent intrinsic value, and that is being reflected in the share price---just like it would be in a bitcoin ETF.

those holdings aren't reflected in earnings, obviously. any public company that invests in bitcoin is going to have the same skewed P/E dynamics. if bitcoin treasuries become commonplace, we're gonna have to rethink the usefulness of P/E.
Even if you buy Italian bonds you may be happy knowing that Italy is one of the top gold owners in the world: that does not mean that you have some guarantees that Italy is economically and financially sound because their ass is backed by tonnes of gold.  Wink
legendary
Activity: 1652
Merit: 1483
Yeah, value investor my ass--at least Miller isn't being one in this case:



Note the P/E of 5048.  Usually, value investors don't chase stocks with P/E's as high as that.  Warren Buffet probably hasn't purchased a stock with a P/E higher than 18.  So yeah, MSTR is massively overvalued--even more so than the rest of the stock market right now.

in all fairness, their assets (bitcoin holdings) represent intrinsic value, and that is being reflected in the share price---just like it would be in a bitcoin ETF.

those holdings aren't reflected in earnings, obviously. any public company that invests in bitcoin is going to have the same skewed P/E dynamics. if bitcoin treasuries become commonplace, we're gonna have to rethink the usefulness of P/E.
member
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Merit: 81
Sorry the link is broken.
I did my own search and found this:

Quote
https://decrypt.co/55120/value-investor-bill-miller-buys-microstrategy-debt-for-the-bitcoin?amp=1

“In our assessment there was very little downside and an almost-free call option on Bitcoin,” he wrote. "MicroStrategy now owns more Bitcoin than any operating company, which imbues some scarcity value above and beyond the value of the core business and the coins it holds."

It's like a safe bet that MicroStrategy shares will rise and the price of Bitcoin will continue to climb. For MicroStrategy bitcoin is the most precious asset today and it is racing to accumulate more.

Michael Saylor is now so popular that he attends interviews and is convincing the audience of his purposes with bitcoin.
legendary
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Self-Custody is a right. Say no to"Non-custodial"
"The time to buy is when there's blood in the streets."
That's a great saying and it's true--but with respect to bitcoin, there's no blood anywhere to be seen on any streets.  Blood was a-plenty back when COVID-19 hit and bitcoin fell below $6k, but all of a sudden after it's hit its all-time high it's a brilliant move to be buying bitcoin.  To me that's insanity.

And frankly I couldn't care less if it were MicroStrategy's CEO buying bitcoin with his own money, but he's not--he's buying it with his public company's money, and boy are they going to be pissed off if bitcoin doesn't keep performing well.  Of course I'm hoping it does anyway, but I question whether he should be buying more at these prices.  It's kind of like big companies that buy back their own stock when it's trading at a P/E of 90.  In hindsight, it's always viewed as a stupid move.  But we'll see.  I'm hoping for the best for MSTR.  
No blood yet, you are right. When I look around though, MSM are all about doom and gloom (have you read about the double spend fud, bitcoin's dead again, the bubble popped ......) and noobs are reacting quite badly to the new market conditions.
We are not there yet, but better be ready at the window.

There does not have to be blood in the streets in order to cause conditions for BTC prices to be ready to continue UPpity.  Sure, we could get more correction from here, but it is not a condition precedent for UP.


Finally at last!
A "Value investor" decided to buy Microstrategy:

Value Investor Bill Miller Buys MicroStrategy Debt for the Bitcoin


Quote

  • Bill Miller is value investor who likes Bitcoin.
  • MicroStrategy is a business that sold securitized debt to finance larger Bitcoin purchases.
  • In an investor letter, Miller explained why his fund bought the MicroStrategy bonds.


So he basically decided to buy MicroStrategy subordinated bond at a yield of.... drumrolls..0.75%

Just wow!

This choice is ridicule for a variety or reasons:
  • They chose to buy an highly structured bond that might turn being converted into MicroStrategy shares, or might not. MicroStrategy could also return the initial cash to investors leaving them with a less than 1% yield.
  • If you want to get long bitcoin get long via the simplest instrument, not the more complex. Buy bitcoin, buy a CME future, buy BTCE, buy GBTC, then buy whatever other financial contract indexed to bitcoin. Only if you are not able buying those, you can start buying MicroStrategy.
  • Buying MicroStrategy, you are not only buying bitcoin, buy you are also buying a whole sovrastructure you are not probably interested in. Just remember that MicroStrategy sells software, what if software do not work? Do not sell? If there is a patent infringement potentially causing billions of loss?
  • If you are a value investors, you are not giving Michael Saylor the power to decide on your investments. What if Michael Saylor decides to sell his bitcoins? or, as someone suggests in the thread, given the fact bitcoin is not an investment, but a treasury assets, to sell some to finance a new software, or a new acquisition or whatever occurrence a CEO (with 70% of the voting power, do not forget), can freely decide?
If I had some money given to this bloke, I would be massively pissed off.

Seems to me that Saylor is doing the right thing if he attempts to provide as much flexibility to his instrument that he can, but does not necessarily mean that he (Saylor) is going to act upon such flexibility (such as selling BTC for whatever reason(s) he believes might be in the interests of the company..  - even though he has options in that direction.
legendary
Activity: 3332
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Cashback 15%
For sure I wouldn't do that to brag about it, being a "value investor".
Yeah, value investor my ass--at least Miller isn't being one in this case:



Note the P/E of 5048.  Usually, value investors don't chase stocks with P/E's as high as that.  Warren Buffet probably hasn't purchased a stock with a P/E higher than 18.  So yeah, MSTR is massively overvalued--even more so than the rest of the stock market right now.

Also, it's no wonder Miller didn't buy MSTR stock outright.  There aren't that many shares outstanding relative to other companies.
legendary
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  • Buying MicroStrategy, you are not only buying bitcoin, buy you are also buying a whole sovrastructure you are not probably interested in. Just remember that MicroStrategy sells software, what if software do not work? Do not sell? If there is a patent infringement potentially causing billions of loss?
Good point--I didn't read the article, but I got the general gist of it by what you posted.  It sounds like Miller wants to hedge his bitcoin bet big time and might be interested in MSTR itself as well as the bitcoin they hold (even if that's not what he's saying). 

Kind of makes me wonder how many other investors are buying MicroStrategy stock "for the bitcoin".  Based on their stock's performance since they started buying BTC, my guess is more than a few.  Crazy.  And I don't really have a problem with that; some folks don't want to buy actual bitcoin.  They'd rather buy shares in a company that owns a lot of it.  I can understand that as a stock market nut myself, but as a bitcoin nut I see your point completely.

If I were a stock market guy, other than a bitcoin nut, I would choose one of the numerous ISIN codes available for investment (in my case, being European BTCE, but I guess Grayscale if I were US based). Most probably, I wouldn't buy MicroStrategy. For sure I wouldn't do that to brag about it, being a "value investor".
legendary
Activity: 3332
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Cashback 15%
  • Buying MicroStrategy, you are not only buying bitcoin, buy you are also buying a whole sovrastructure you are not probably interested in. Just remember that MicroStrategy sells software, what if software do not work? Do not sell? If there is a patent infringement potentially causing billions of loss?
Good point--I didn't read the article, but I got the general gist of it by what you posted.  It sounds like Miller wants to hedge his bitcoin bet big time and might be interested in MSTR itself as well as the bitcoin they hold (even if that's not what he's saying). 

Kind of makes me wonder how many other investors are buying MicroStrategy stock "for the bitcoin".  Based on their stock's performance since they started buying BTC, my guess is more than a few.  Crazy.  And I don't really have a problem with that; some folks don't want to buy actual bitcoin.  They'd rather buy shares in a company that owns a lot of it.  I can understand that as a stock market nut myself, but as a bitcoin nut I see your point completely.
legendary
Activity: 2114
Merit: 15144
Fully fledged Merit Cycler - Golden Feather 22-23
Finally at last!
A "Value investor" decided to buy Microstrategy:

Value Investor Bill Miller Buys MicroStrategy Debt for the Bitcoin


Quote

  • Bill Miller is value investor who likes Bitcoin.
  • MicroStrategy is a business that sold securitized debt to finance larger Bitcoin purchases.
  • In an investor letter, Miller explained why his fund bought the MicroStrategy bonds.


So he basically decided to buy MicroStrategy subordinated bond at a yield of.... drumrolls..0.75%

Just wow!

This choice is ridicule for a variety or reasons:
  • They chose to buy an highly structured bond that might turn being converted into MicroStrategy shares, or might not. MicroStrategy could also return the initial cash to investors leaving them with a less than 1% yield.
  • If you want to get long bitcoin get long via the simplest instrument, not the more complex. Buy bitcoin, buy a CME future, buy BTCE, buy GBTC, then buy whatever other financial contract indexed to bitcoin. Only if you are not able buying those, you can start buying MicroStrategy.
  • Buying MicroStrategy, you are not only buying bitcoin, buy you are also buying a whole sovrastructure you are not probably interested in. Just remember that MicroStrategy sells software, what if software do not work? Do not sell? If there is a patent infringement potentially causing billions of loss?
  • If you are a value investors, you are not giving Michael Saylor the power to decide on your investments. What if Michael Saylor decides to sell his bitcoins? or, as someone suggests in the thread, given the fact bitcoin is not an investment, but a treasury assets, to sell some to finance a new software, or a new acquisition or whatever occurrence a CEO (with 70% of the voting power, do not forget), can freely decide?
If I had some money given to this bloke, I would be massively pissed off.

legendary
Activity: 1316
Merit: 1481
"The time to buy is when there's blood in the streets."
That's a great saying and it's true--but with respect to bitcoin, there's no blood anywhere to be seen on any streets.  Blood was a-plenty back when COVID-19 hit and bitcoin fell below $6k, but all of a sudden after it's hit its all-time high it's a brilliant move to be buying bitcoin.  To me that's insanity.

And frankly I couldn't care less if it were MicroStrategy's CEO buying bitcoin with his own money, but he's not--he's buying it with his public company's money, and boy are they going to be pissed off if bitcoin doesn't keep performing well.  Of course I'm hoping it does anyway, but I question whether he should be buying more at these prices.  It's kind of like big companies that buy back their own stock when it's trading at a P/E of 90.  In hindsight, it's always viewed as a stupid move.  But we'll see.  I'm hoping for the best for MSTR.  
No blood yet, you are right. When I look around though, MSM are all about doom and gloom (have you read about the double spend fud, bitcoin's dead again, the bubble popped ......) and noobs are reacting quite badly to the new market conditions.
We are not there yet, but better be ready at the window.
hero member
Activity: 2100
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if they buy a very large quantity, then they will also sell a very large amount right?
which is my question here about the institution is when they will sell it, I myself am still confused about finding this answer,
do they have a sales contract? if you imagine the institution selling Bitcoin will be even scarier than the correction that occurred the other day.

Well they aren't using Bitcoin as an investment to sell at some price for profit. They are literally using it as their treasury reserve instead of USD. So they are just holding all their cash in Bitcoin instead of USD. The only time they would need to sell it when they want to spend some of that cash. Looks like we should expect them to continue buying every once in a while with extra cash they have from their business. I'd assume they buy more after already covering all their expenses in general with their revenue so the only reason to sell would be for non-regular costs like specific business expansions or something.
legendary
Activity: 3738
Merit: 10374
Self-Custody is a right. Say no to"Non-custodial"
if they buy a very large quantity, then they will also sell a very large amount right?
which is my question here about the institution is when they will sell it, I myself am still confused about finding this answer,
do they have a sales contract? if you imagine the institution selling Bitcoin will be even scarier than the correction that occurred the other day.

Don't think about how they will manage their portfolio. Because they will never divulge their strategies here. Maybe after they completed their deal or something. But right now, bitcoin is still hot in the market, so don't think they will disclose their process here. For all we know, they are already slowly selling some of their stash which was bought around 20k. So who knows what's going on in their portfolio?

Your comment makes hardly any sense.. and is contrary to what is likely actually happening.  You seem to be engaged in wishful-thinking rather than really attempting to understand what is actually going on in the bitcoin space and especially in respect to MSTR and perhaps some other companies who also might have decided to copy MSTR's strategy..  

Largely MSTR has provided their playbook and quite a few guidelines and justifications for allocating (substantial portions of their cash reserves) into bitcoin.  Sure, they may not have divulged every last detail of what they are doing or what they might do beyond what they have chosen to provide, but they have given a decently broad overview and also justifications for "why bitcoin."

Yes, there are some folks participating in this very thread who are presuming that since MSTR is buying, they must be secretly selling too or have intentions to sell BTC in the near future..

Yeah, right. Roll Eyes

If MSTR had anywhere in the $1million to $10million per month positive cashflow, and they have already said that they are buying BTC with such extra cashflow that they have coming in.. then why all of a sudden would they be doing the opposite of what they said that they are doing?  In essence, MSTR is employing a kind of  dollar cost averaging practice on the corporate level whether they buy in several lump sums over the month (or one lump sum) or they buy on a shorter period basis at several times through the month  (and we are not just referring to one month of BTC buying since MSTR has largely been buying BTC on a fairly regular basis - including engaging in some leveraging, too, since about July/August of last year).

Edited typos/grammar and clarifications
legendary
Activity: 1652
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"The time to buy is when there's blood in the streets."
That's a great saying and it's true--but with respect to bitcoin, there's no blood anywhere to be seen on any streets.

did you not see that $13k/32% crash over the past couple weeks? Tongue

sure, we could technically go lower, but that's a lot of blood already. so many people were just ruined by margin calls---there was something like $1 billion in longs liquidated on the crash below $30k. so many new bitcoin investors just panic sold at the bottom too.

And frankly I couldn't care less if it were MicroStrategy's CEO buying bitcoin with his own money, but he's not--he's buying it with his public company's money, and boy are they going to be pissed off if bitcoin doesn't keep performing well.

actually, both:

Quote
Some have asked how much #BTC I own. I personally #hodl 17,732 BTC which I bought at $9,882 each on average.
https://twitter.com/michael_saylor/status/1321422012380753921
legendary
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Hmm I guess since Microstrategy is using BTC as its treasury reserve now they will just keep buying a little bit at a time when they have cash on hand. Interesting. I'd assumed they were done buying, but obviously its a very profitable business so we should see Microstrategy continuing to stack sats a few million $ worth at a time every once in a while when they have fresh profit from the business. Presumably the might also sell a little bit here and there at points when they need extra cash for some operational cost. Gotta hand it to the CEO, he's the smartest CEO on the planet right now.

Very well put: they are probably converting their cash flows into BTC.
That was part of the plan, after all.
Another thing I noticed is that this communication comes almost exactly after one month since the precious one: they might just be communicating the average of buying over the last month.
Shall we expect another update in one month?
full member
Activity: 1064
Merit: 101
if they buy a very large quantity, then they will also sell a very large amount right?
which is my question here about the institution is when they will sell it, I myself am still confused about finding this answer,
do they have a sales contract? if you imagine the institution selling Bitcoin will be even scarier than the correction that occurred the other day.
legendary
Activity: 3332
Merit: 6809
Cashback 15%
"The time to buy is when there's blood in the streets."
That's a great saying and it's true--but with respect to bitcoin, there's no blood anywhere to be seen on any streets.  Blood was a-plenty back when COVID-19 hit and bitcoin fell below $6k, but all of a sudden after it's hit its all-time high it's a brilliant move to be buying bitcoin.  To me that's insanity.

And frankly I couldn't care less if it were MicroStrategy's CEO buying bitcoin with his own money, but he's not--he's buying it with his public company's money, and boy are they going to be pissed off if bitcoin doesn't keep performing well.  Of course I'm hoping it does anyway, but I question whether he should be buying more at these prices.  It's kind of like big companies that buy back their own stock when it's trading at a P/E of 90.  In hindsight, it's always viewed as a stupid move.  But we'll see.  I'm hoping for the best for MSTR. 
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