Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ - page 42. (Read 14491 times)

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

Value Investor Bill Miller Buys MicroStrategy Debt for the Bitcoin



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.

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.

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.

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.

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

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

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.


actually, both:

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?

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.

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. 

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.

"The time to buy is when there's blood in the streets."
We need more people like Michael Saylor now that the noobs' gates have been opened.
Bitcoin is not something to simply invest in! Either you buy because you believe in its value proposition or leave it there for us.

Microstrategy bought another 10 millions in bitcoin:



https://twitter.com/michael_saylor/status/1352614708797464582?s=21

10 millions is peanuts for them. Like buying booze with the 5 dollar note you found in an old pair of jeans.

Morgan Stanley have definitely changed their tune  [BIG TIME] towards Bitcoin.
The 10.9% stake in Microstrategy has as you say paid off. and is an indirect
avenue into Bitcoin investing, I think its only a matter of time before they go
direct aswell.


I think this is solely down to Michael Saylor himself and how he is so bullish on
Bitcoin. He talks and walks the walk. His advice publicly makes sense even to
every day Joe Soap's [like me]


Sell all their Bitcoin and move into ? The whole philosophy is to abandon FIAT
based investments and move into something which preserves a value.

According to a SEC filing released on January 8th, Morgan Stanley now owns 10% of Microstrategy.



They now own 792,627 shares, equal to 10.9% of the total Class A shares (the ones with regular voting power).
With MicroStrategy trading at 531 on that day, that represented an investment worth around 490$ million.

Today a few days have passed, bitcoin is down a bit, and Microstrategy is now worth 495, so they lost 7%.

What if they had invested directly in BTC?
Let's look at the CME BRR index, the underlying spot index used to settle CME futures.
The index is down 21% from January 8th: from 40982 to 32502.

Just for an added comparison, what if they had invested in Grayscale (they are closed to investments, right now, but let's ignore that)
GBTC, from January 8th to January 11th fell from 44.42 to 37.40, of 16% (the premium compressed a little bit and helped reducing the loss).
hat:

So apparently Microstrategy lost way less than Bitcoin, and also less than GBTC.

Actually Microstrategy it is not a full Bitcoin company (yet)


If we look at my spreadsheet we see t


So MS bought 10% of a 28% Bitcoin Company.
Even thou Micheal Saylor pledged not to do so, they could sell their BTC stash tomorrow, drastically changing the outlook for the firm (for better or worse, let's discuss elsewhere).
What I am saying is that this choice is weird and largely sub-optimal.

Unless the SEC approved a fully regulated, supervised BTC Exchange-Traded Products (if not a proper ETF; but unlikely), investment managers won't have a better choice to buy "shady tech stocks who appear to be long bitcoin" of "suboptimal investment vehicles" who charge investors huge premiums.

Definitely, there is space for improvement from regulators.

A recap of this thread:

Microstrategy's BTC Holdings More Than Double in Value to $2.4 Billion Four Months Later



It's just a recap, but from time to time those summaries are useful when dealing with those incredible performances.

I think the ultimate thesis of Micheal Saylor is that DJIA rising 65% during last months (I think BTC had a better performance btw), is at least in part due to the loss in value of USD, which is the account measure of the index itself.

In case of dollar debasement, or loss of purchasing power, prices will inevitably go up (official inflation numbers may be, may be not). This will push up nominal revenue for firms, thus pushing nominal stock prices up.

Nominal price increase, unchanged purchasing power: stocks are like a sub-optimal gold, in this sense.

They are very lucky that they have bought most of their bitcoins at a lower rate and it increased very quickly. Sure they bought some at nearly 22k levels and that is a lot of money, but their average is still under 16k when you look at it, and they own nearly a billion dollars worth of it now. Which means price could drop as much as 16k and they would be still in a tiny bit of a profit, and anything above that is a profit for them too. So in order for them to lose, bitcoin needs to lose more than 40% and that is not happening anytime soon.

This is why they are capable of buying more and more because they know that they have a lot of bitcoin from lower prices. However I think Michael Saylor likes bitcoin too much to care about the price, even if it drops to very low levels he would still be bullish in the long term, we are lucky to have him at our side.

If the other assets were underperforming, then I could have agreed. But that is not the case. The Dow Jones Industrial Average has risen by around 65% during the last 6-7 months (ever since the start of the global COVID 19 pandemic). Most of the investors are selling their other assets (such as treasury bonds and bullion) to invest in equities. And this time, how can Saylor justify his move to invest in cryptocurrency?

Bingo, that's more what I'm talking about. While the price is rising, life is good and Saylor doesn't have to answer to anyone.

Imagine BTC crashing so fast that MSTR triggers circuit breakers. Imagine their position stays in the red for a while, and they have to keep servicing debt just to hold unrealized losses. I'm curious how common shareholders or the SEC will react, and how Saylor will alleviate their concerns. I don't think the SEC is thrilled about what Microstrategy is doing, so I'm curious to see how that angle plays out too.


You're right now that I think about it. I think I have some level of resentment towards companies like Facebook and Microstrategy because I feel like they are bringing regulators down on us as quickly as possible. They're unleashing a whole lot of pain on us. I'm not going to feel bad if Microstrategy becomes a bagholder and then incurs the wrath of their shareholders and the SEC. It would be entertaining.

Well im sure the stakeholders were not in the dark while investing into Microstrategy's plan.

Im sure they also realise that holding investments in FIAT based assets is actually eroding away with time.

The Microstrategy strategy is about securing wealth, the wealth has already been made they all want it to be there in 10 years time for example.

What the U.S authorities do is anyones guess and a seperate matter. They are already wrecking the $ so thats not safe anyway.

He may not be having any issue in holding for 5 years or even 30 years. But what about the other stakeholders/investors? Are they going to remain silent, in case the price dips by 80% (similar to the situation we had in 2015)? And looking at the way the Congress is going after Libra/Diem, I am not feeling very comfortable right now. I have a feeling that the authorities may target Bitcoin very soon.