Michael Saylor responded to the Bloomberg news anchor this week about Jim Chanos’ bearish trade on micro-tactics.
According to Saylor’s short-term characterization by one of the most successful short-sellers in history, there are probably three ways Chanos’ trade can go.
The founder of the hedge fund, who named himself for predicting the collapse of Enron and China’s real estate, believes MSTR is overvalued. Specifically, chanos placed a Hedged short sale To the Saylor company.
As MSTR trades at a net asset value of $63 billion (MNAV) at a multiple of 1.7 times, Chanos shortened the MSTR and hedged his shorts in long Bitcoin (BTC) trades.
That hedged bet is easy. Chanos believes that MNAV in MSTR decreases over time. Anyone can follow The deal set up a showdown between the two Wall Street Titans.
Saylor believes Chanos is misunderstanding what MicroStrategy has to offer. Distracting attention from MSTR’s premiums compared to BTC Holdings, Saylor told Bloomberg TV viewers that he is in fact the world’s “large publisher of BTC-backed credit products.”
3 Ways Jim Chanos Lose Money MicroStrategy
Saylor went on to explain three passes that Chanos’ short deals to MicroStrategy can take. All three passes, in Saylor’s selfish view, lose money due to his short selling enemy.
Saylor focused on three publicly published series of preferred stocks in MicroStrategy: Strike (STRK), Strife (STRF) and Stride (STRD). He explained that through the provision of these dividends, MicroStrategy has found another way to obtain undiluted BTC to common MSTR shareholders.
Saylor emphasized the market (ATM) stock sales literally diluted $1 for every dollar of BTC purchase, but priority does not increase the number of shares in MSTR.
Instead, they hinder future cash flows of micro strategies. Some of these must be paid as dividends to preferred shareholders.
In Saylor’s view, Wall Street has a lot of appetite for new series of preferred stocks or other undiluted credit measures. As a result, he sees three ways Chanos’ short selling could occur.
First, Saylor believes MicroStrategy’s MNAV could last or increase over the years as market demand for BTC finance companies persists. This is Chanos’ worst scenario.
Second, Saylor believes MSTR can trade down slightly for “weak premiums.”
Third, Saylor warned Chanos that if MSTR declines to negative MNAV, he plans to sell more priority and use the proceeds to buy back MSTR stock.
Read more: MicroStrategy Wannabes and the Return of Mnav Mania
“There is no liquidation risk” and “Never come”
In Saylor’s view, all three outcomes are bad news for Chanos.
Equipment such as STRK, STRF, and STRD priority include “no liquidation risk,” “Never Come Due Due,” and “no interest rate risk.”
Unlike the provision of head office bonds and diluted common stock, Saylor believes that priorities and other equipment can flow into micro-tactics for a very long time.
Chanos is totally opposed to Saylor on his part that this capitalising company can maintain MNAV for the long term.
Chanos briefly explains his outlook, saying, “Shareholders are paying about $220,000 for BTC, which is around $110,000.” It’s an easy and obvious play for a hedged short seller.