We all know the drill- they have taken out a $650m & a $950m loan at rates under .01% and have been buying bitcoin since sub $12k and then using the capital to pump it up. Which in turn continues to pump-up their own underlying assets which are bitcoins that were acquired at various levels from $10k on up.
They then use the new equity from all the underlying being pumped up and then take out more loans and do it over and over. Rinse repeat. This in essence lets them have a position essentially short the dollar and long bitcoin . Whats funny is people act like this is risky, yet if you think of how much traders are paying using margin (I do not recommend using margin in this manner if you want leverage run option spreads) traders are paying far more in margin interest then 1%.
"MicroStrategy Inc. boosted its convertible debt sale to buy Bitcoin by nearly half and cut the coupon to 0%, making it virtually a straight bet on the price of world’s largest cryptocurrency.
The software maker priced $900 million of senior convertible notes, up from the $600 million announced Tuesday, and gave an option for $150 million more within 13 days. The debt will pay no interest and the company estimates total proceeds of about $1 billion -- enough to buy about 20,000 Bitcoin at current levels."
- Market Cap 8.5B
- Sales $480M
- P/ FCF 241 (Very high!)
- EPS this Y +95.7%
- Gross Margin 81%
- Net Margin 5.4%
Interesting company, with Institutions owning now 86% of it, and I have read they include the following:
- BlackRock Funds 14% 1,060,491 shares
- Morgan Stanley Investments 10% 792,627 shares
- Vanguard Group 10% 753,268 shares
- First Trust Advisors 4.9% 355,600 shares
Mutual Funds also have decent exposure:
- iShares Core S&P Small Cap 6.5% 475,526 Shares
- First Trust Cloud Computing 4.38% 317,358 Shares
- Vanguard Total Stock Market Index 2.78% 201,852 Shares
- Vanguard Small Cap Index Fund 2.37% 172,112 Shares
- iShares Russell 2000 2.3% 169,504 Shares
- Government Pension Fund 2.14% 155,057 Shares
I longed today at $914, however I will only add to the position at $800 which we can see here is S2 on the pivots:
$800 as well will be where the 20d moving average will be, which is my favorite moving average to long off of after it confirms support. (Red Line)
And finally this is where we will meet the Ribbon.
With the nice runup in Bitcoin today though I did open a small position at this high level. - At least there will be no FOMO feelings.
Good luck trading friends and do your due diligence.
Additional Citation: https://www.bloomberg.com/news/articles/2021-02-16/microstrategy-raises-bitcoin-bet-with-more-convertible-bonds
Huge premium. Unjustified.
Better buy BTC directly !
Premium will continue to evaporate.
Short term target: MSTR = USD 800
1. Bitcoing ETF will be available to retail investors
2. Bifinex will be conclude NYAC or DoJ
Medium term target: MSTR = USD 500