Michael Saylor's Bitcoin Flywheel: Selling $MSTR to Buy BTC at a Premium 🤔🚀
Michael Saylor is pumping Bitcoin on the media every single day & selling convertible notes to buy more $Bitcoin(BTC.USD.CC)$ . So why is he then selling 5000 shares of his $MicroStrategy(MSTR)$ stock everyday for a cumulative $195m of stock sold YTD? This is almost a $1bn annual run rate fwiw.
In September 2023 Saylor filed a 105b1 plan to regularly sell his shares. As you can see on the chart in the last thread he is selling at very regular intervals. So why is he issuing convertibles to buy more Bitcoin and simultaneously pushing up the price which then pushes up his stock price? Namely, because $MicroStrategy(MSTR)$ equity trades at an insane premium to its underlying Software business + BTC After-Tax holdings of 120%.
So this implies that for $MicroStrategy(MSTR)$ to trade at NO PREMIUM to its BTC holdings at $68k price the price of BTC would need to be $157,000 - 130% higher than last price I checked this morning.
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So the real question is why is anyone buying this stock at such a monster premium when you could simply buy $Bitcoin(BTC.USD.CC)$ at NAV in the spot market or via a low cost ETF? I get the convertible arbitrage guys are doing and that sort of explains the mechanics but who is holding MSTR beta directionally here? At a minimum why not just go long BTC and try to play for the basis convergence?
I understand why Saylor is selling convertibles at the company level and his own stock to the public as each transaction is accretive and his stock is wildly overvalued. This has true blue ponzi / reflexive / flywheel dynamics in that Saylor issues converts to buy Bitcoin, drives up the price of Bitcoin, which drives up his equity value, then he sells his own stock, and then does it again. Guy has down two converts for $1.4bn in the last two weeks. Tbh, he should just keep doing them as long as the market will bear it. Just be weary when the arbitrage breaks down, as it always does. Then we could see some real unwinds. Probably need to look at the options market for clues as to when the protections will unwind. Given the monster contango that BTC futures trade in currently and expensive implied vol I get what is going on but question how long this can last. FWIW, this guy seems to know how to sell equity from a timing perspective looking back over the last 4 years.
Let me know if you have any thoughts!
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