Taking a Speculation on MSTR

[Hornblower]

I have bought back into MSTR yesterday at $337.56 per share.

As I have stated before, I consider this almost a value play...buying Microstrategy with 152,333 Bitcoin in their reserves, is like buying a cheap profitable company with an ENORMOUS cash reserve. That's the downside protection. The upside is, this is a leveraged play on the Bitcoin price, with a low chance of one of their new bitcoin lightning products for commerce doing really well.

I believe the market frequently mis-prices the shares...it whipsaws between being valued as if it doesn't hold these assets ($3.96 billion in Bitcoin!), or it gets way over-valued when Bitcoin shoots up in price and people get excited because it's all over the media, because it's one of the only ways that investors in the US can get exposure to Bitcoin in their tax-sheltered accounts.

We are heading towards the next Bitcoin halving event (when the amount of new Bitcoin issued is cut in half), these happen after 210,000 blocks have been produced (roughly every 4 years ). Historically the Bitcoin price leaps higher around these halvings. Fiat currencies continue to be debased, governments continue to spend more than they earn. Geopolitics continues on it's insane path. The US empire continues to stumble towards inevitable collapse. The BRICS countries continue trying & failing to agree on a new reserve currency. In other words, Bitcoin has tailwinds. I'm basing my interest in MSTR on the opinion that the Bitcoin price increases over time...with lots of volatility.

I'm ambivalent towards MSTR's long-term success as a company, but I think there continues to be a trading opportunity here...buy MSTR when Bitcoin crashes, sell when the price sharply recovered & you've made 30-40%. Repeat. This is my 4th time around now with this cycle.

H

[TheMotorcycleBoy]

I just quickly looked this firm up on SharePad. They are saying that for FY2022:

Cash = $43.8M
Intangibles = $1840M
Long term borrowing = $2445M

Where are you getting the $3.96B in Bitcoin figure from?

[Hornblower]

Where are you getting the $3.96B in Bitcoin figure from?

Because I follow the stock, and from their own reports. The amount of Bitcoin that MSTR is holding is not in doubt. Oh It's gone up from last time I looked, 152,800 now.

https://www.microstrategy.com/en/investor-relations

H

[TheMotorcycleBoy]

Don't worry - I'm not dissing you, that's why I looked them up. Any opportunity is worth my time in evaluating and of course SharePad's data isn't always all it's cracked up to be. So I looked up their most recent 10-Q.

In USD thousands. June 30 2023                                      |        
                                                                    |        
Current assets:                                                     |        
Cash and cash equivalents                                           |   65968
Restricted cash                                                     |    2085
Accounts receivable, net                                            |  121901
Prepaid expenses and other current assets                           |   19680
Total current assets                                                |  209634
Digital assets                                                      | 2323252
Property and equipment, net                                         |   30507
Right-of-use assets                                                 |   58264
Deposits and other assets                                           |   22421
Deferred tax assets, net                                            |  719026
TOTAL ASSETS                                                        | 3572738
                                                                    |        
Current liabilities:                                                |        
Accounts payable, accrued expenses, and operating lease liabilities |   33660
Accrued compensation and employee benefits                          |   41492
Accrued interest                                                    |    1493
Current portion of long-term debt, net                              |     468
Deferred revenue and advance payments                               |  195817
Total current liabilities                                           |  272930
Long-term debt, net                                                 | 2177974
Deferred revenue and advance payments                               |   11244
Operating lease liabilities                                         |   63814
Other long-term liabilities                                         |   17826
Deferred tax liabilities                                            |     198
TOTAL LIABILITIES                                                   | 2783256

Yes, I assume that the entry marked Digital assets is their Bitcoin holding, stated as $2.3B then. I'm seeing the BTC price as $24K in June 30th, and $20K now. I agree with you, in so far as their BTC holding being nice.

But the cons would be a large amount of debt - $2.2B. Hopefully their BTC will grow in value as they chisel away at their debt. Hmm... however they have booked $11M in interest payments this quarter, but an operating loss of $22M in the same period.

Good luck,
Matt

[Hornblower]

So that speculation was spectacular!

I've traded in & out of MSTR 4 times this year, scalping 30-40% profit each time. My thesis worked out perfectly ...the market doesn't understand what Saylor is up to & veers between greed & fear in a predictable pattern.

The stock has gone from $150 to $609 (!) over the year.

Now, the arithmetical among you will have noticed already that I would have faired MUCH better just buying & holding. True...true, but I'm very happy with what MSTR has done for my portfolio this year. It has allowed me to significantly outperform the market, whilst simultaneously accumulating HY stocks. I sold before the recent surge in prices & bought a FTSE100 ETF, not out of loyalty to the country, but because it appears undervalued compared to other indices. Je ne regrette rien.

Today it was announced that Saylor has bought MORE bitcoin. He's up to 189,150 now. I believe he's front-running the (seemingly inevitable) ETF announcements coming in early January. His strategy of borrowing/issuing more shares to keep buying bitcoin is fascinating to watch. The deals are engineered so that he has more bitcoin-per-share each time.

DYOR etc.

H

[Hornblower]

Well, that's been a spectacular investment!

I hope some lurkers on here took the plunge & picked up some MSTR, they are sitting at $1300 today!

Disclaimer: I took profits & sold months ago, I haven't participated in the recent gains.

H