Probably very good advice 🙏
Discussion
Lyn just said out loud what I think you and I got to agreement on a few days back…..
I keep seeing people try to predict what the MSTR premium over NAV “should” be, as a valuation question.
However, the answer doesn’t truly exist, because it’s recursive. The current state of it is an input back to itself. It’s arbitraged, in other words. As long as there is a sizable premium, MSTR will continue issuing securities until demand is saturated for a period of time.
A high premium tells MSTR to keep issuing more securities, which in the long arc of time pushes the premium back down. A low premium tells MSTR to slow down or halt security issuance until a premium re-emerges.
And gm.
I would agree. I only make MSTR moves when the NAV is at 2(ish) or lower. Its about 2.2 right now. The lowest of all 2024 so far. When the bear market shows back up, I think it will be late summer 2025, this trade will not work for most. My cost average is ridiculously low so I will be in the money by a lot even if there is an 80% BTC price drop. I will be reassessing daily in the bear. With the addition of MSTR into the QQQ happening in the next week or so, the low NAV, today is a great day to get in. I will add more with options. Since Aug. 2020, shareholders have 7x more bitcoin attached to them. The top 25 shareholders of MSTR are institutions that own 44% of the company and they are nor selling. They hold it in their funds. 9% is owned by retail. The BTC MSTR owns is worth 43 billion right now. The market cap is 94 billion.
Understood…
Last few things…
1. Never trade your cost basis on ANYthing. It clouds good decision making. Evaluate all positions in the “present moment/Now”
2. Historical evidence shows that companies wildly outperform the few months going INTO index inclusion. Then normalise to underperform in the months/year just after. Buy the rumour. Sell the news. 😉
3. Most importantly, get out of MSTR all together sooner than later. Those sats don’t belong to you. That will matter sooner than you may think.
Be well brother 🙏🏻
Looks like we have reached the “sell on the news” part of the MSTR NAV premium trade.
Hope you rolled most of those leaps into UTXOs 🙏🏻
(Not being sarcastic. Really hope you traded it well. Its not for the faint of heart as I learned decades ago in my day job 🤪)
I will not be selling any of my MSTR position in the middle of an amazing bull market. I have been building this this position since 08-2020. On Friday when the QQQ news was announced MSTR was $389. Right now on Tuesday morning in pre market its at $415. So no, I did not sell, and on paper, I am up so much that any pull backs are insignificant. FASB rules went into effect on Sunday and that is another major tailwind come Q1 earnings reporting. A possible S&P inclusion before this market turns into a bear market and ETF's creating a perpetual bid for BTC, a possible reserve asset allocation coming, ect... I have diamond hands with anything BTC related for at least another 6 to 12 months.
Not suggesting selling for fiat. Just UTXOs.
Yesterday’s top will likely mark the top in the premium of MSTR market cap to its underlying value in BTC.
While it will remain highly volatile in the short term, the trend will likely be down….
2 reasons…..
History suggests that once ANY stock is included in a major index, its relatively performance stabilises. The tailwind (of premium, not absolute price) is not what is was during the “rumor” phase.
The FASB rule change will encourage big money players to hold their OWN Bitcoin now at the margin. Since the accounting rules are now not stacked against them. That was a big reason that MSTR was so popular with hedge funds. That “draw” is over now.
If these comments make you upset, then you are too emotional about the position. My experience as a professional investor taught me that is EXACTLY when I needed to step back and look impartially at ALL factors.
Happy to make a side bet with you that BTC will outperform MSTR over next 12 months to prove to you I believe what I’m saying.
Sorry if I’m over stepping. Just wanting others to have benefit of what I’m “seeing”. Right or wrong. Then they can make their own decisions.
Peace brother. 🙏🏻😌
Its the opposite of what you feel. I am glad to have this conversation. I appreciate your experience and I like to step back from my own personnel analysis and get other opinions. One thing that I know is that you don't know what you don't know. Or said another way, I know that I do not know. I think that looking at the past to predict the future of this asset is not a good approach this time around. Literally, everything except the protocol itself is different this cycle and in a major bullish way. FASB really only matters to me in regards to MSTR in this next (Q1) earnings report. After that, you are right on point. Making a bet on this means that if I am wrong, I loose twice, and if I am right, the money I would make on the bet from being right is fractions of a penny compared to my profit (unrealized profit until it is actually realized).
Back to 389 (down 11 percent since 1pm yesterday) on MSTR yet Bitcoin is same price. 106 ish.
NAV premium collapsing. For very understandable reasons. This will likely continue until premium is 1.25-1.5x Bitcoin holdings.
Where is it now? 2-2.25x
Its at 2.072x right now. Its been there since around 12-10-24. Lowest year to date. I use this site to keep tabs. https://www.mstr-tracker.com/
Great data set.
It will trade between 1.5 and 2 for most of 2025 is my read. Then collapse to .75-1 in 2026.
NAV Premium against Diluted Share: 2.541x with stock price at $379 this morning
So that graph you linked is inaccurate?
What graph is that that you say I linked?
I see what graph you are talking about now. That was from the other day. My post from this morning is the new NAV. It’s moving up. Just like clock work. I add to my positions when the NAV gets down to 2 or lower and then ride it back up to 3 to 4, then take some profits. Wash, rinse repeat.
Hmmmm. 🤔
What you are saying doesn’t match this real time chart OR what the price changes of MSTR and the underlying Bitcoin have been doing over the past few sessions, weeks and months….
The NAV multiple per “basic share” is at 2.056 barely moved from yesterday’s multi month LOW of 2.04. (After peaking in the mid 3s for a nano-second a few weeks ago when MSTR traded above 500)
The full diluted NAV at 2.36 just represents the marginal .3 multiples of underlying Bitcoin dilution if all convertible bonds converted to pure equity (from debt).
Nothing moved in any meaningful way from yesterday to today in these relationships.
We are still at multi month lows in the NAV/BTC ratio. Basic OR diluted.
And still too HIGH, IMO. But you already know that…😉
I go off of the URL for the site I gave you yesterday in regards to the “official” NAV number.
Sometimes I forget o refresh the site since its always open and I never turn my computer off. So you are correct as that was a NAV from the 16th. Anyhow, right now at this red hot moment its at 1.865 after all the FUD from yesterdays FOMC announcement. It's wild to watch in real time how these markets (all the markets) are so entrenched in what the Fed's say and not so much in what they do. In the end, its what they do and not what they say of course. On the tracker site, its interesting that if you only look at the top headlines you see the NAV at 2.140x. If you look deeper in to the actual charts they provide by scrolling down, the NAV is always different than the red hot minute NAV on the charts. I forget to look at the charts sometimes as well.
Dont know if this link shared cleanly.
Balanced article, I thought.
Pretty much spells out what I was sharing with you (as my opinion) over past week.
Even at 2x price to NAV, this is a very risky stock to trade from the long side. Especially with leaps….
Sure, you could catch an expanding wave up again. But that would be an exception. Very hard to time.
Better to just stack UTXOs, in my opinion. Over time, premium over NAV will likely trend towards 1 ☝️
Furthermore….(and THIS is the primary reason I’d be concerned if I had exposure to your trade)…
The NAV premium spent MOST of the 1q of 2024 between 1 and 1.5. With a month trading right at 1. Like it SHOULD!
There is no perpetual motion machine here. Only if there is sufficiently unsophisticated buyers to pay absurd premiums to the most liquid asset in the world.
Saylor KNOWS this. And so he will continue to sell stock at 2x, 1.75x, 1.5x etc
It’s free money for him and mstr. At the EXPENSE of those paying the high premium for mstr stock vs BTC NAV.
You may get another pop (to 2.25 or so) but this is a “one trick pony”.
Fortunately for you, you made big coin on that trick!!! 💰
