Community discussions

17 hours ago

looks like volatility and liquidity align, buy signal for sure

19 hours ago

another fkg day, COIN is 5% up and this is barely Green

19 hours ago

Saylor had to discount the Euro STRE 20%, from €100 to €80, to get enough interested buyers. They raised a smidge over $700M. That gives STRE an effective yield of 12.5% that MSTR common shareholders will be diluted each quarter to pay. That is extremely expensive money, it is perpetual (never goes away), and the dividends are cumulative that rises 1% quarterly while in arrears. That is likely why the stock gapped down at the opening this morning.

If one assumes BTC is going to have a 30% ARR over the next 5 years, a holder of IBIT would see a cumulative return of 269.4% (after fund expenses) in 5 years vs. a cumulative return of 271.3% for BTC direct, only a 2% difference.

Meanwhile MSTR now has $1 billion annual dividend commitments between all the STRx products. That will require 1.5% annual shareholder dilution just to pay the dividends, the effects of which compound over time. If an investor buys MSTR when the mNAV is 1.25 (25% premium above BTC spot), and assuming BTC has the same 30% ARR, and assuming MSTR maintains a 1.25 mNAV, they would have a cumulative return of only 176% over the same 5 year period due to dividend dilution and the upfront mNAV premium drag. That's a difference of almost 100% less owning MSTR vs. IBIT or BTC direct. It doesn't matter how many more coins MSTR buys and adds to their stack, the math remains the same if the mNAV stays the same. That is an annual drag of 7.4% vs 0.35% for IBIT. That does not even account for the losses in the software division nor the huge option bonuses that management is awarded every year. Add those in and you have well over 10% annual drag vs. 0.35% for IBIT. Or 0% for Bitcoin direct.

Tell me again why people should buy this stock as a BTC proxy???

thelogman

yesterday

Don't let the little bit of recovery since the opening fool you. Short-sellers would be idiots to not be taking some profits at the opening this morning. The delta between MSTR and BTC continues to grow, along with the short's profits. However, BTC is also flirting with a deeper correction, so it makes sense for shorts to lock in some profit on their BTC/MSTR arbitrage at this level. Always a good idea to keep some dry powder for other short-term opportunities that are opening up, like some names in the AI and quantum space.

Look at the VIX... It should have been up 40% this week if this was the beginning of a deep, market-wide correction. But it's not up even half that amount. That's a good sign that the froth is coming out of the risk-on space and the overall market will probably be ok. In a couple of weeks this will all be a faint memory and the risk-on plays will have their day in the sun again like newfound toys. MSTR might even get a little stray fairy dust sprinkled on it.