MicroStrategy (NASDAQ:MSTR) has had a rough week as the price of Bitcoin (BTC-USD) has plummeted lower. This had led to mass speculation that the company would face a margin call on its 129,218 Bitcoin position. Despite this, Director Carl Rickertsen disclosed purchasing 4,000 shares of MSTR stock on June 13.
CFO Phong Le had previously stated that Bitcoin would need to fall to $21,000 for MicroStrategy to receive a margin call. The software analytics company has a $205 million loan from Silvergate Capital (NYSE:SI). The loan requires $410 million in collateral.
However, CEO Michael Saylor tweeted out that the margin call price is actually $3,562. If the price for Bitcoin were to fall to $3,562, MicroStrategy could post 115,109 unpledged Bitcoins as collateral. He explained that when the company first decided to focus on a Bitcoin-centric strategy, it “anticipated volatility and structured its balance sheet so that it could continue to #HODL through adversity.” In an email to Bloomberg, Saylor added, “As long as the Silvergate loan remains collateralized with an LTV less than 50%, there is no margin call.”
Today, the company’s Bitcoin position is worth around $2.9 billion, which means that it has lost over $1 billion from the price decline. Director Carl Rickertsen seems unfazed, though, as evidenced by his recent purchase.
Director Carl Rickertsen Buys MSTR Stock
On June 13, Rickertsen purchased 4,000 shares of MSTR at an average price of $152 per share. Rickertsen previously owned zero shares of MSTR before his purchase. In addition, the purchase was not transacted via a prearranged 10b5-1 trading plan. This suggests that Rickertsen believes that the current price of MicroStrategy is attractive. Furthermore, with the company’s Bitcoin-heavy balance sheet, this suggests that he believes the price of Bitcoin will recover.
Two other insiders have purchased shares this year. On May 11, Director Leslie Rechan purchased 2,000 shares at average prices ranging between $204.37 and $205.10. Rechan purchased the shares for a family trust. On the same day, Senior Executive Vice President (SEVP) and CTO Tim Lang purchased 2,500 shares at an average price of $200 per share. Neither of these purchases were transacted with a 10b5-1 plan.
These purchases suggest the insiders’ confidence in MicroStrategy and Bitcoin. Saylor has previously stated that he has no intentions of selling any Bitcoin. Meanwhile, in an interview with CNBC, he added that “The margin call thing is much ado about nothing.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
