Shares of MicroStrategy (NASDAQ:MSTR) stock are sinking lower today but still up by over 150% year-to-date, following the publication of a short report from Kerrisdale Capital. The hedge fund disclosed 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 fallen due to the proliferation of Bitcoin exchange-traded products (ETPs) and exchange-traded funds (ETFs).
“The bitcoin price currently implied by MicroStrategy’s stock is now over $177k, i.e., two and a half times the spot price of bitcoin. The days when MicroStrategy shares represented a rare, unique way to gain access to bitcoin are long over,” said Kerrisdale.
The company has managed to amass a significant amount of Bitcoin through equity offerings, convertible notes and debt. Through dilution, the amount of Bitcoin represented by each share of MSTR has been “virtually unchanged,” meaning that value creation has been correlated with the price appreciation of Bitcoin. Because of this, Kerrisdale believes that owning MSTR has no major benefit when compared to just holding actual Bitcoin.
Kerrisdale adds that MicroStrategy’s equity premium has been 2x or below 94% of the trading days since 2021. Its current equity premium is at 2.6x compared to its historical premium of 1.3x.
5 Big Buyers of MSTR Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. These investors’ actions are tracked through quarterly 13F filings, with the most recent batch detailing positions as of Dec. 31.
Buyers of MSTR during Q4 are sitting on a massive gain. The latest 13F submissions show that 349 institutional investors owned a stake in MicroStrategy, up by 22.46% compared to the prior quarter. These investors own a total of 8.13 million shares, up by 17.14% compared to Q3.
Let’s take a look at the company’s top five buyers:
- Morgan Stanley (NYSE:MS) bought 299,083 shares, bringing its stake to 602,441 shares.
- Susquehanna bought 185,011 shares, bringing its stake to 287,180 shares.
- BlackRock (NYSE:BLK) bought 116,704 shares, bringing its stake to 1.02 million shares.
- T. Rowe Price (NASDAQ:TROW) bought 70,696 shares, bringing its stake to 77,927 shares.
- FMR bought 69,876 shares, bringing its stake to 558,914 shares.
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.
