morpheus on Nostr: Some key passages from @LynAldenContact's latest paywalled newsletter on $MSTR: ...
Some key passages from @LynAldenContact's latest paywalled newsletter on $MSTR:
"Investors are paying in the ballpark of about 3x net asset value for the company. When they had their massive price surge in March 2024, I warned about the high NAV premium, and trimmed some of the position out. However, I haven’t trimmed all of it, and keep letting the rest of the position run. It touched new highs on Friday."
"From a risk/reward perspective, I prefer buying direct bitcoin versus MicroStrategy when the premium is this high like it has been since March. It feels safer owning the asset 1:1 when that disconnect grows to this degree. But it doesn’t mean the disconnect has to narrow anytime soon. It might or it might not."
"MicroStrategy directly benefits from this high premium to NAV. They can keep issuing more convertible notes or other types of capital, and use it to buy bitcoin, which increases their amount of bitcoin per share. (In contrast, if MicroStrategy were trading below NAV, then issuing equity or convertible notes would reduce the amount of bitcoin per share)."
"What MicroStrategy is doing here makes absolute sense. The market is giving them a big premium, and so by all accounts they’re just going to keep arbitraging it for their shareholders while meeting market demand for its securities. They’ll likely keep issuing more and more capital and suck in more and more bitcoin until the trade is exhausted and premiums over NAV diminish."
"It’s important to consider investor mandates. There are portfolio managers that have a mandate to only own stocks, for example, and if a portfolio manager happens to be bullish on bitcoin, then a few entities like MicroStrategy and some miners are the only avenues for them to express that view. They can’t buy a spot bitcoin ETF or other similar instrument. Similarly, there are bond managers that happen be bullish on bitcoin, but have a mandate to only own bonds. So they can buy MicroStrategy convertible bonds to capture potential upside when the bitcoin price surges, within the context of a bond fund. There is no financial entity that has been identifying and meeting this need for certain types of security mandates better than MicroStrategy."
"This is a recursive flywheel that I will continue to monitor. A lot of people monitor ETF flows, which I think are important, but this specific combination of high premium to NAV and thus the incentive to keep issuing capital to buy more bitcoin, creates a big vacuum that will keep sucking up bitcoin until it doesn’t anymore."
"Investors are paying in the ballpark of about 3x net asset value for the company. When they had their massive price surge in March 2024, I warned about the high NAV premium, and trimmed some of the position out. However, I haven’t trimmed all of it, and keep letting the rest of the position run. It touched new highs on Friday."
"From a risk/reward perspective, I prefer buying direct bitcoin versus MicroStrategy when the premium is this high like it has been since March. It feels safer owning the asset 1:1 when that disconnect grows to this degree. But it doesn’t mean the disconnect has to narrow anytime soon. It might or it might not."
"MicroStrategy directly benefits from this high premium to NAV. They can keep issuing more convertible notes or other types of capital, and use it to buy bitcoin, which increases their amount of bitcoin per share. (In contrast, if MicroStrategy were trading below NAV, then issuing equity or convertible notes would reduce the amount of bitcoin per share)."
"What MicroStrategy is doing here makes absolute sense. The market is giving them a big premium, and so by all accounts they’re just going to keep arbitraging it for their shareholders while meeting market demand for its securities. They’ll likely keep issuing more and more capital and suck in more and more bitcoin until the trade is exhausted and premiums over NAV diminish."
"It’s important to consider investor mandates. There are portfolio managers that have a mandate to only own stocks, for example, and if a portfolio manager happens to be bullish on bitcoin, then a few entities like MicroStrategy and some miners are the only avenues for them to express that view. They can’t buy a spot bitcoin ETF or other similar instrument. Similarly, there are bond managers that happen be bullish on bitcoin, but have a mandate to only own bonds. So they can buy MicroStrategy convertible bonds to capture potential upside when the bitcoin price surges, within the context of a bond fund. There is no financial entity that has been identifying and meeting this need for certain types of security mandates better than MicroStrategy."
"This is a recursive flywheel that I will continue to monitor. A lot of people monitor ETF flows, which I think are important, but this specific combination of high premium to NAV and thus the incentive to keep issuing capital to buy more bitcoin, creates a big vacuum that will keep sucking up bitcoin until it doesn’t anymore."