Investment Manager Shorts MicroStrategy, Calls Bitcoin Premium “Unjustifiable” — Is There Trouble Ahead?

cryptonews.com:

Investment manager Kerrisdale Capital said on March 28 that shares of MicroStrategy (MSTR) – the world’s largest corporate Bitcoin holder – are currently trading at an “unjustifiable” premium to MicroStrategy’s actual Bitcoin holdings.

MSTR shares have exploded in price over the past two months, but many analysts think the stock is due for a major pullback.

“We are long bitcoin and short shares of MicroStrategy… Shares of MicroStrategy have soared amid a recent rise in the price of bitcoin but, as is often the case with crypto, things have gotten carried away,” the firm wrote.

At the time the report was published, MSTR’s price was over $1900 per share. Based on the company’s BTC holdings per share, Kerrisdale said this would imply a current Bitcoin price of $177,000 per coin – a spot price two and a half times higher than where it trades today.

GM. We're short $MSTR and long bitcoin. Report avail at https://t.co/XDg6uAJDRa. Crypto trades often get carried away and $MSTR is no exception. The BTC price implied in $MSTR shares is now over $177k, an unjustifiable 2.6x the spot price of BTC. (1/6)

— Kerrisdale Capital (@KerrisdaleCap) March 28, 2024

Since MicroStrategy’s balance sheet is almost entirely comprised of Bitcoin (BTC), investors have often valued the firm like it were a Bitcoin spot ETF. The company’s executive chairman, Michael Saylor, has called the firm a Bitcoin ETF with perks including moderate leverage and no management fees.

Starting in January, the company faced an influx of competition from several asset managers that launched the United States’ first actual Bitcoin spot ETFs. BlackRock’s iShares Bitcoin Trust, IBIT, has already accumulated more Bitcoin than MicroStrategy.

“The days when MicroStrategy shares