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Shares of Microstrategy (NASDAQ:MSTR) shares are falling lower today, but are still up over 150% year to date, following the release of a short report out of Kerrisdale Capital. The hedge fund said in the report that it is long Bitcoin (BTC USD) and short MSTR.
Kerrisdale’s thesis is based on MicroStrategy being an overvalued proxy for Bitcoin. Additionally, MicroStrategy’s strength as a proxy has diminished due to the proliferation of Bitcoin exchange-traded products (ETPs) and exchange-traded funds (ETFs).
“The current Bitcoin price implied by MicroStrategy stock is now over $177,000, two and a half times the spot price of Bitcoin. “Long gone are the days when MicroStrategy shares represented a rare and unique way to gain exposure to Bitcoin,” Kerrisdale said.
The company has managed to accumulate a significant amount of Bitcoin through equity offerings, convertible bonds, and debt. The dilution left the amount of Bitcoin represented by each MSTR share “virtually unchanged,” meaning value creation is correlated with Bitcoin’s price appreciation. For this reason, Kerrisdale believes that owning MSTR does not have much of an advantage compared to simply holding actual Bitcoin.
Kerrisdale adds that MicroStrategy’s stock premium has been 2x or less on 94% of trading days since 2021. The current equity premium is 2.6x compared to the historical premium of 1.3x.
persecution institutional ownership is important because these large investors provide liquidity and support for stocks. The actions of these investors are tracked through quarterly 13F filings, with the most recent batch detailing positions as of December 31st.
MSTR buyers are sitting on a massive profit in the fourth quarter. The latest 13F filings show that 349 institutional investors owned shares in MicroStrategy, an increase of 22.46% quarter-on-quarter. These investors own a total of 8.13 million shares, an increase of 17.14% compared to the third quarter.
Let’s take a look at the company’s top five buyers:
At the time of publication, Eddie Pan did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to those of InvestorPlace.com Publishing Guidelines.
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