.
whoo we are back episode 31 true north the investment grade podcast and uh if you
weren't aware we got no jeff today so i am the captain now and uh actually i drew the short straw
and maybe we should air a little dirty laundry but tim said hey uh soleil and i can can co-host
the podcast and then he jumped on a plane and just left me holding the bag so regular uh bravo
foxtrot that guy but we love you Tim next time so I'm gonna share my screen
we're gonna do the same old same old try to do Jeffy proud for anybody who is
watching us for the first time we got grain Mason Dan and Adrian and
Soleil. And let's just jump into the leverage tab. And as you can see, their leverage has been
trending down. With the current price of Bitcoin at 107-ish today, they're only at a 13.2%
percent leverage ratio so there's plenty of room for them to add and one of the things that i've
been saying lately is that i suspected they were going to you know maybe wait for bitcoin to make
some kind of move and then ivy would spike a little bit they could get good um
good uh convertible bond deals going and then this iv would kind of spike as the leverage ratio
increased. But with the preferreds ramping up, it kind of makes me wonder if the preferreds are all
we need from here going out. And even at like, you know, like 2000 Bitcoin a week, and then maybe
if that ramped up to like 4000 a week as the preferred start to mature, that would still be
about 3,000 Bitcoin a week for the next 26 weeks, which would be another 78,000 Bitcoin,
which would put us at 670,000 Bitcoin, which is real darn close to some of the predictions that
we made. I can't remember what everybody's predictions were, but that's kind of like
right around where some of our guesses were landing.
So what do you guys think?
Are we just going with preferreds from now on,
or are we going to see some of these convertible bond deals
that we're used to seeing just hitting left and right?
Yes, Oleg.
I'm echoing. Sorry.
Do you want to come back to you?
Yeah, let's stop sharing the screen and then I'll hop in.
Yeah, so Saleh, when Dan talks, put your microphone on mute and maybe that'll stop the echo when he's talking.
Will do.
I think in regards to the converts versus the preferred, so there's a couple of really important things I think that I have overlooked and some of us have overlooked in terms of the risk associated with the convert.
Well, one, the convertible note holders obviously are predatory towards the stock considering
that they're mostly Delta hedgers, right?
And I've overlooked that.
I think a lot of us have overlooked that.
Oh, it's okay.
It's cell pressure, right?
If they, these, when these instruments come out, they're pretty much a 50 Delta instrument,
meaning if strategy moves 3% in a day, they'll move 1.5% that day.
These convertible notes, essentially they have 50% price exposure to the underlying MSTR.
And that changes as the price of MSTR goes below and above the strike of those convertible
notes.
That's what delta is, its sensitivity to the price and the underlying.
But what they do, the convertible are, and we'll have a little section on this later,
what they do is they short the equivalent exposure to MSTR.
So they're net neutral.
So when these converts come out, they go and they short the stock and it's very predatory
and provides cell pressure.
Then as the price of MSTR fluctuates above and below the strike price of these convertible
notes, they're both adding to their short as the price increases above the strike and they're
buying back their short for a profit as the price of MSTR goes below the strike of these convertible
notes. And that dampens the volatility. And obviously that's not great for shareholders
who are looking for the volatility. Furthermore, with these converts, there's term risk, right?
So the MSTR investor, or sorry, the strategy itself, the corporation, they take on term debt
risk with these notes. And we've always said, oh, they're, you know, spaced, they're laddered out
five years and more into the future. And based on Bitcoin cycles, it's very unlikely the notes
don't convert X, Y, and Z. But if you're going out and trying to rate strategies, preferred
instruments, strike, strife, stride, then having term debt sit senior to the preferreds in the
capital stack is detrimental to the credit worthiness of those instruments. And for those
reasons, I think strategy is quite frustrated that they give convert bond holders all of this
priority, these extremely good terms, very cheap call options, essentially. And all they do is they
smoke the pricing period by shorting the stock, short the equity, kill the vol, and they get the
best terms in the entire capital stack. So I think strategy is quite frankly trying to move away from
these and give the best terms to the strife holders and the strike holders who are in line with the
common equity holders who are long the stock and they don't take on the term risk associated with
the convertible notes. So I think that's kind of where they're headed. Dan, hypothetically,
if there was a market appetite big enough to consume, you know, all the demand for these that
were long only, would they consider that? And is that even, that would just have to be based off
a relationship, basically a handshake, right? I think that's a really good point is like,
So you're saying, what if there was some sort of buyer who wanted to be a long only shop and strategy would then issue the converts to them exclusively?
I've talked to Josh about that a bit, and I think you have as well, Mason.
And I mean, that's a super interesting prospect, but what sort of terms can you provide in the actual note?
like i i think right wouldn't wouldn't uh convert are they're so good for convertible arbing wouldn't
the convertible art shops just get in on that deal and strategy would have to throw their hands up
and be like well i'm selling to these guys and they said they wouldn't convert arb and then they
do convert arb like yeah i mean i guess i guess you're right i don't know yeah that pinky promise
isn't gonna hold up yeah no their incentive is to short the stock um so they're i don't see how
a long only convertible note structure could be enforced long term without without having to
completely restructure the way these deals are done now I'm not saying it's impossible but what
I'm what I'm saying is if it is done would the terms be as beneficial to strategy in terms of
interest rate yeah great point yeah great point versus would the the potential note holder see it
potentially less attractive because they don't have that hedging opportunity and this is kind of
why when people have been kind of you know talking about the atm the atm atm have been like it's not
the atm there are too many other factors that go into what what could be potentially suppressing
volatility what could be potentially affecting the um equity price and now that we've had time
to reflect on it we see the long-term net effect of the delta hedging that are going on with these
these convertible notes and even though they are staggered out i think the next was what 2028 2029
one of those two even though they're staggered out these holders are incentivized to to short the
stock in perpetuity so the only thing that's going to break that is bitcoin really breaking out and
sentiment really shifting in our favor broader market sentiment and equities and the sentiment
because right now i think the sentiment around equity is relatively fine i don't think it's low
but we're going to need to see some sort of pivot in the market to change the dynamics that are
taking place right now with these converts and we're going to need to see that more long term
before they would even consider another one i think yeah they can be super picky right now i
think because they have the preferreds so they can kind of just grind up the um the leverage ratio if
they want to and then if people are just banging on the doors like please let us give you money and
and they can just get really great terms,
maybe that's when they finally just do it.
Because at the beginning, I think they had really bad terms.
I think some of their first deals,
I think their Bitcoin is even encumbered, right?
So they just keep getting better and better terms over time.
So they're really not desperate for any of these deals.
So like-
Oh, go ahead.
No, go ahead, Adrian, go ahead.
No, they're not desperate.
But long-term, I think they're gonna have to consider
some things that they're not wanting to consider. More active generation of yield on their Bitcoin
holdings, perhaps, some other kinds of structures with regards to what it is they're doing in terms
of these preferred offerings. They're going to have to diversify because something is going to
need to justify that additional multiple that we all know is coming. But if they go through this
process and they just issue converts, even with more favorable terms, is the leverage of the
to the balance sheet going to be worth it in terms of the amount of bitcoin they hold and the amount
of suppression the the amount of bitcoin they eventually hold and the amount of suppression
they're going to see in terms of volatility it's going to have to be a balance so i think that
they're going to have to do something that signals to the market a multiple a higher multiple is
justified and also find a way to net to neutralize the effect of the neutralizing effect of the
convertible box so um they're gonna have to think outside of the box and that's something that i
think that they're probably working through now i don't know if this is a problem they need to solve
in the next six months and i don't really even see it as a problem i just see it as a natural
progression of the market if strategy is as i've been saying or as some of us have been saying an
economy economy economies of scale have different factors involved and they have both combat they
They both have adversarial actors and cooperative actors.
Right now, what we're seeing is adversarial actors
in one stance, but cooperative actors in another.
And that kind of a seesaw effect
is what's being equalized right now.
So I do think this is gonna shift,
but it's just a matter of how they're gonna do it.
Yeah, that's a really, really good point, Adrian.
And I think sailors alluded multiple times
to different products in different markets,
And that could be really, really interesting.
We've seen in like the UK market, for example, with the different LBEs popping up there and getting so much traction.
All these markets are starved for yield.
We've seen it in Japan and South Korea.
So I don't see why a product issued in another jurisdiction wouldn't really take off a Japanese stride.
I think it really is a race between Metaplan and Strategy to issue those two products.
And I think they can both win in that environment.
They can.
And the thing about it is, sorry, Mason, just one quick point.
The thing about it is right now, a lot of these other plays, they're not LBEs yet.
They're just treasury companies.
They haven't taken on leverage.
So I can see a future where instead of expanding into the market with additional offerings,
what if strategy expands these markets through acquisition?
A lot of these companies are relatively small.
And if they don't or if they cannot like ramp up the leverage on their balance sheet and scale, they're going to be essentially what, flat?
They're going to accumulate Bitcoin, yes.
But what's going to justify the long term multiple that we're seeing, that they want to see, that they have been seeing, right?
So what if strategy expands into the market in terms of acquisition and in terms of offerings in these other markets?
i think that is something that not only broadens this economic model that we've been talking about
but also it can justify a multiple if the strategy is now scaling out into different jurisdictions
with different offerings yeah yeah that's a that's a super interesting idea because it's like a it's
an injection of attention right like it's if you're if you're completely flat your m nav's flat i mean
we're very much in an attention-based economy right and the the companies that have the biggest
followings that have the most attention that have the most uh narrative and momentum behind them are
going to be able to do the strategy the best and the ones that kind of fall flat on their face
yeah it's a really interesting proposition that they could go in there and acquire them um before
that Adrian I was just going to say I think sailor said in Prague that I think he kind of admitted
that going into other markets like Japan is going to be you know very difficult and I think he kind
of hinted at that Metaplanet is going to have a a potential lead there so I thought that was a
telling that number one he's looking into it and number two it seems very difficult
it is but japan is a known market so while meta planet i do think will eventually have a monopoly
in japan and perhaps even the broader asian market as a result he can find other ways to do things
it's just a matter of what they're willing to do and how they structure it we didn't we didn't see
the impetus for the preferred offerings until struck some strike came out right then it was
strike and i'm stride and now we're thinking okay well now he can do x y and z it makes sense for
to do that i think once they figure out a way to do this the first time if it becomes something that
they really want to consider which i think you know to your point the fact that he even mentioned
that meant that they were thinking about it so they're going to find a way to do it eventually
which market that's done in i can't i can't say but as you said we are an intention economy which
i which i refer to as sentiment right this is all sentiment mnav is all about sentiment mnav is all
about attention. So they're going to need to do something new outside of the box of what they've
been doing in order to drive sentiment. And I want to be very, very specific here. They're not
driving sentiment in terms of their directly impacting sentiment. What they're doing is
they're creating an environment where sentiment can run. If they scale this out into other markets,
and then the market starts to cooperate in terms of liquidity, in terms of sentiment,
in terms of broader macroeconomic trends,
then the thing can really run.
I think people are putting cart before the horse
in terms of their assessment of MNAV.
MNAV is after the fact.
It's not before the fact.
So MNAV can only run
if they create an environment for it to run.
And for them to justify multiple longer term
over the course of not just months and quarters,
but years and decades,
I think they're going to have to scale this thing out
far larger than we're anticipating right now.
And I do think that, you know,
more more preferreds more offerings expanding into other markets acquisitions of some small company at some point um that you know that holds a big corner in their balance sheet maybe even pivoting back to
the like i've been saying that they can do on the business intelligence side they find a way to
scale that that's another way to justify a multiple they're really gonna have to start thinking about
this thing holistically um outside of just what bitcoin derived moves can they make then you start
thinking about what kind of a market move can they make what kind of a broader move can they make
outside of just bitcoin because all of it is synergy and this is a synergistic opportunity
that they have so if they can do that which i think they can things are going to shift rather
drastically but as we've been saying to people for a year now all of us individually if not longer
this is a longer term hold this is a longer term play so where it is in five years versus
where it was five years ago i think it's going to be drastically different
yeah so lay might if we pop up this uh screen share here absolutely go for it um it should be
in the background i should i requested to share oh so now i have to figure out how to allow you to
share that's super um it should it should be somewhere where like the backstage is
but in the meantime uh what do you guys think about here we go
so all i i wanted to go through the the three things and just in summary and i think this idea
mason and i've been talking about a bit too and i think it's exactly what adrian was saying
is this idea that atm like why is atm why is there a demand for equity right first and foremost
What we've seen in the UK markets, in the Japanese markets, and in the US market prior to ETFs and then still during ETFs, there's been jurisdictional demand for exposure to Bitcoin.
Plus, there's kind of the sentiment demand for BTC yield and growth expectations on the equity.
So that's kind of why ATM, like for ATM to continue working for any sort of LBE or Bitcoin treasury company, there has to be demand for that equity.
And maybe that's also a couple of points I forgot to mention where the options markets, the liquidity,
all of these things are inputs into demand for an equity. Then obviously you have the converts,
which give holders, these large institutions, essentially a free call option on the common
equity plus priority term claim over the Bitcoin, which introduces, as I said, exponentially more
risk for strategy. And then the prefs, right? And the prefs, I think are the real unlock.
and i totally see what adrian's saying about expanding into different markets in this and
the next thing but then someone in the comments also said sailor needs to drain the bond market
i really do believe the press are the pump between the bond market and the bitcoin equals ecosystem
and i just really don't think people um obviously there's very little trading volume for strife and
strike and strata right now but i think that will continue to increase it really should as long as
like markets move slowly and people take a time to change their minds but i think that will come
you guys want to hop in there say anything i missed no it will and i agree the thing with it
is is that he can drain the bond market and the share price will will expand and the overall um
value of the company will expand but that doesn't necessarily mean that the multiple will expand
so wouldn't that be reflected in btc yield like all pref issuance is comes back down to the bottom
amount of ptc yield it can and that does yeah yeah yeah no that that does make sense but
what kind of a multiple right now yeah you know the if we're talking about 1.5 or 2
that's more akin to a bank right or or something like that or not perhaps perhaps more like a reit
right what we want is a multiple of three four five eventually at some point right so i think that
the the bond market he can siphon away capital from the bond market but there's two things with
that you're absolutely right but there's two things with it one that will take a longer time
so we're going to see the multiple perhaps be i don't want to say trapped but stuck between 1.5
to 2 maybe as he does that process because it's not as if he's going to get the bond market
overnight right there's gonna be something that's a very very long process and two because of that
longer term um process over the course of the next five ten fifteen years or or whatever we're going
to see a multiple increase yes but we're not going to see but but what i'm what i'm trying to get at
is if he's targeting that 2x out performance i think that's perfect if we want a larger multiple
i think they're going to have to diversify their approach totally agree so i think we're both right
But, you know, sorry, go ahead.
I totally agree.
I just, I concur.
I totally agree.
And then...
No, UX is fine.
That's not a bad thing.
2X of Bitcoin for the next decades.
I mean, that's a win.
Well, you know what people are looking for, right?
They want to see, well, can we get the three, the four, the five?
I agree.
Yeah.
Is the leverage ratio affecting like the amplitude of the moves?
Like, let's just say 3MNAV is our baseline.
and then at a low ratio, maybe we fluctuate between 2.5 and 3.5.
But once we're levered up to like 20, 25%,
does that kind of like increase the peaks and troughs to like 2 to 5 or something?
Or is it maybe not connected in that way?
I think the swings have been more violent to the upside
when they've had higher leverage ratios for whatever reason.
But that could also be because of a smaller market cap.
So it's tough to do like a really, really kind of isolated experiment on historical data.
You know?
Yeah.
And it seems like the run of November.
Go ahead, Adrian.
Go ahead.
I was going to say, the other thing with that is that people are perhaps underestimating
is exactly what Dan just mentioned, the market cap.
It's going to take a lot more to move the price now that the market cap is over 100 billion.
So we have a lot of factors right now.
that a lot of a complex of a lot of factors right now that are impacting price which is why um you
know the moves that we've seen we haven't seen a rip to 500 or 600 yet it's because the market cap
is much larger now and there's far more players in the market because of the preferreds in addition
to what we just discussed with regards to the r trading and then we have the options market of
course we have all the leverage plays and whatnot and then we have the underlying bitcoin price
action there's a lot there are a lot of factors going into play right now that are playing into
where the stock price is but we still should be cognizant of the fact that stock like stock split
adjusted before that we are over thirty four hundred dollars a share when we're when we're
over two thousand dollars a share people losing their mind last year in the best way possible
right so it's not as if this this um approach this strategy isn't working it is it's just that
it's going to need to ebb and fall and adjust to the market definitely i have this quick um
illustration of delta hedging because it does take it it's easy to think you understand how
what it means and where the money's made but it took me a really little bit to understand where
the money's actually made i just want to illustrate the point that the money's made on the way down
so this you can see the msdr price at 380 let's say they issue a convert at a 50 premium or 30
premium it's effectively a 50 delta instrument meaning these convertible note hedgers they
borrow money they buy the convertible note from strategy they short half the value of the
convertible note in common equity that's in blue if the price of mstr then goes down right down to
300 the delta or the sensitivity of the instrument to the price of mstr goes down right that's kind of
options theory and what that means is now to be delta neutral or not exposed to the price
they buy back some of their shorts and when they buy back these shorts these shorts are then bought
at a profit because the price is now down so they shorted up here but they weren't exposed to the
price they bought back their short here made a small profit and they're still not exposed to the
price of mstr but then as the price of mstr runs back up past the all-time high or wherever they
They then short the stock more to remain delta neutral and then run the playbook again, up and down, up and down, making money on the increments down.
So that's the way it works.
It's kind of interesting the way they do that.
There's a seesaw effect is what they're playing right now.
Exactly.
It's right.
As the price goes up, more shorting.
As the price goes down, less shorting.
What's that do?
It dampens volatility.
And they make money both ways.
They make money.
Exactly.
Then I think to Adrian's point, what we're all kind of talking about, I know Mason has something to say here, is the capital structure.
So how much room is there really for strike and strife?
And obviously, these are pictures you've all seen before from the different offerings.
But look how much room they really have.
This is their current capital stack.
Let me zoom in on that.
This here is their current capital stack.
And that's something to remember how much runway there is for these converts if there is demand.
Hop in guys, if you have anything on that.
No, keep going.
Okay.
And then I have this one we'll save for later.
I know Mason likes that one.
But what I wanted to really illustrate here is something that I think we touched on a
bit, but it's the convertible securities secured versus unsecured debt.
And this is super key because we're trying to analyze all these Bitcoin treasury companies, whether it be new entrance to the market, strategy, metaplan, whatever it be.
Most, almost all are unsecured debt.
So there's no specific pledged collateral for these convertible notes.
What they take as collateral, per se, is the creditworthiness of the company.
So in the case of strategy, those convertible notes sit senior in the capital stack and the collateral that has been pledged to them are upon the repayment date or the term date is that strategy will continue to have assets and will be obliged to pay the principal back upon maturity of those bonds.
Now, this is a little bit of just a historical fact, but secured debt, on the other hand,
has tends to have a higher recovery rate than unsecured debt in the case of default.
But, you know, we don't think that's very likely with any of these companies.
The point, though, the real key difference between a Bitcoin treasury company that has
unsecured debt and one that has secured debt is the margin call and the liquidation risk.
So you remember back in the bear market when everyone was saying strategy is going to get
liquidated. This is the next thing they're going to get margin called. We all knew
No, this is senior unsecured debt.
So the company would have to be, upon maturity, strategy will owe the debt if it doesn't convert
the principal to the bondholders.
With secured debt, there is collateral.
And so the case of NACA, they have a 2x, and I don't know the exact provisions, but generally
they have a 2x collateral requirement on the secure, the senior secured convertible notes.
So if the collateral, the collateral being the Bitcoin, let's say Bitcoin draws down 80% tomorrow, they would be margin called on that debt.
And they would be either required to pledge more collateral to meet this 2x backing of the secured note, or they'd have to return principal to the actual bondholders.
Right. And so this means there is liquidation risk with secured debt, whereas with unsecured, there's not.
that's something that's going to be really really really important looking at these new companies
because secure debt will give the bondholders uh the bondholders will give whatever companies
offering secure debt better terms whereas with the unsecured debt the company will be at the company
will get um less favorable terms um but again they don't face this liquidation risk
and that's why the atm is so powerful he's buying the bitcoin outright exactly so um then and again
i'm not trying to get people grumpy in the chat or that are watching this but when people complain
about the atm and that it's suppressing the price as we've just discussed one there are far more
factors that are that are impacting price right and two the atm is this is the biggest weapon in
their arsenal buying the bitcoin outright and making and making sure that it's not at risk
allows them to survive the bear market so when we do see another drawdown whether it's 20 whether
it's 80% strategy is far better positioned to survive it. Whether it's NACA, whether some of
these other companies that are doing, that have that collateral risk, a bear market gets a little
bit more prickly for them. Because if we do see a prolonged drawdown, they can have a variety of
situations which can put that Bitcoin at risk. So these are all things that are people, to your
point, are going to have to work through and flesh out in terms of investment decisions that
they make. And it's going to be a learning opportunity for us
collectively seeing how these different instruments last in a
bear market. But strategy already survived one I mean, 2022
is nuts. Everything blew up, right? It was the entire rehypothecation
bubble. I don't think we're going to see that kind of a risk
again. But if we do see a prolonged drawdown for any
particular reason, this is why I mentioned the whole potential for
strategy acquiring companies or for them expanding into market in
different means i think there'll be opportunities there and if they can take advantage of them
it may be ironically enough due to the weakness of other players in the market versus the weakness
of their own strategy yeah i mean depending on how bubbly this this market gets in the next year or
maybe two um there could be so many companies where we simply don't have the bandwidth to know
to look at you know all the the capital structures and uh it could really come out of nowhere but
it you know I hear a lot of people kind of raising these concerns about this I think
it's top of mind amongst Bitcoiners and I think um I'm I I've been starting to think about you know
what what can these new companies really get for size and then how many companies can get
uh really large positions and you know if a company with 500 Bitcoin goes under
that's that's not really going to do much right yeah so it it really has to be the uh
the first comers and i think we're seeing this this cohort here i think you know strategy
similar meta planet uh we now have anthony popliano um gamestop basically companies with
thousands of coins those are the ones that really matter and so far i think most of them
at least from the the little research i have done because there's just so many they look okay but
then you know you you hear stuff like like dan brought up the uh the secure debt on naka and it
you know to me it's like huh that's a little that's interesting um if i was an investor i would want
to look into that more so here's the here's another thing that i've thought through i've been trying to
you know, assess what happens if we do see Armageddon, right? Or some kind of prolonged
drawdown where strategy is ideally positioned to survive while these other companies are not.
And to Mason, to your point about the large players with regards to having thousands of
Bitcoin, right now, every single one of these small Bitcoin treasury companies could go under,
and it's not even going to be a blip in the market in terms of Bitcoin selling, right? It's just not
going to matter um so what if sailor is in a position in the future where he's playing warren
buff and he's bailing these companies out for the good of the ecosystem so let's say that you have
a company that's been a prolonged bear market strategy is relatively in a
i don't want to say safe position but they are in a survivable position even though they have
a long drawdown and you have a risk of a lot of companies starting to go under does sailor start
looking at taking positions in those companies as you start looking at to facilitate some kind of a
i don know injection of some kind i can just see this going so many different ways because the Bitcoin trade is cooperative It not adversarial It is in strategy benefit for these companies to
succeed. Will, if we do have a prolonged drawdown where companies start to fail,
would strategy somehow act as a buffer for that? Just because of the sheer scale of their operation.
I'm not saying that because I think it's feasible or true. I'm just saying, is it possible? And what
does that even look like? Because everyone keeps talking about Armageddon, but with regards to,
oh, these companies are going to blow up, oh, it's going to be the next bubble, so on and so forth.
I just don't see that happening. There's too many cooperative reasons for these companies to see
each other succeed versus a mass contagion versus of some kind spreading and them starting to drop
like flies. So that's one of the other scenarios that I've been kind of trying to game theory on
my own mind and what that would even look like. Yeah, I think it would have to be a pretty juicy
deal for them to do that.
I think, I mean, if Bitcoin is
imposing the free market on the world,
I think that too big to fail
kind of thing or the, I know it's cooperative,
but
by not
allowing someone to fail
when they deserve to fail, like if they over
leverage, you're almost kind of like
sending
bad signals to the market
that you can make
mistakes and still survive. So I
think we're going to
we're going to see a lot less of the,
the too big to fail kind of things where people are making bad business
decisions and then still able to like zombie their way through life.
Perhaps it's not too big to fail.
Perhaps it's more of a,
if you let letting them fail without risk to Bitcoin.
So what I mean by that is if they do fail and if they are failing,
what's failing in that,
the,
in that kind of a scenario,
it's not Bitcoin that's failing.
It's the equity that's failing.
There is a way that the equity can be allowed to fail while the Bitcoin could be acquired in some form of structured deal, isn't there?
Because this is me asking. This isn't me telling.
If a company, if a treasury company is failing, the equity is failing itself.
It's not the Bitcoin on the balance sheet that's failing.
They're going to have a very simple debt to income or debt to asset ratio.
So is there a scenario where those Bitcoin could be acquired in a direct fashion that
does not facilitate selling in the open market while the company is still allowed to fail?
Yeah.
I mean, it's like those hostile takeovers they're doing in the 80s.
And there's probably people in the audience that know this better than myself.
But they used to go up, buy a controlling stake in the company, and then sell off the
assets for a profit.
Right?
There you go.
Especially this.
it's you'd buy the company at a discount it'd have to be trading below probably 0.8 nav
if it's trading below 0.8 nav you buy controlling interest in the company sell off the other assets
keep the bitcoin you got the bitcoin for free um transaction fees hopefully hopefully were less
than 20 of the total cost and you made and you bought bitcoin at a discount it's like buying ftx
claims in the bottom of the bear right you get bitcoin for 10 cents on the dollar yeah and in
this case um if you think of it you know how there's a hostile takeover model that is activist
model right people take a large enough stake in a company to create to be able to facilitate change
because they have that controlling interest right or large enough interest we can call this a bitcoin
activist model sailor's going in to make sure that he protects the over the overall um price action
of bitcoin because it's in his advantage it is it is in his interest to do so but the equity is then
allowed to fail so you can think of it as a bitcoin activist model or hostile takeover model
a little hard if you want to phrase it, but I just think that because to Nitu's point,
it is cooperative. We do not want a too big to fail kind of a dynamic playing up,
but we do not also, we also don't want a situation where these companies are just dumping Bitcoin
in the market and then the market overreacts because proportionally it's a small amount of
Bitcoin, but you know what the market's going to do, right? Market makers are going to find a way
to fund this and make it a larger issue than it is so i think kind of in a way strategy can act as
somewhat of a circuit breaker for all these things if that happens i mean it's in their best interest
dan remember when we got strategy world and i stopped in the hallway and i was like strategy
is going to buy some of these companies i was like because i just felt this wave of of of momentum
happening with with these companies and this was in you know may and it's in their best entry like
if the scenario arises and if it's feasible if the discount if the bitcoin's trading at a discount
like or the company is trading at a discount to their bitcoin like strategy was in in 2022 2023
it makes sense to to do an acquisition and get the bitcoin below market price it's a no-brainer
Yeah, and OBC Dave in the comments here is making a really good point too, though.
It's making me rethink this whole conversation.
But he's saying leverage buyouts tend to work better with illiquid assets like facilities,
equipment and such.
Whereas, you know, any sort of company that's in distress could in theory sell their Bitcoin
on the open market and wind up operations.
And so that's a good point too.
I guess we'll see.
Maybe there's, you know, certain corporate structures that make it such that that's difficult
So the shareholders want to be bought out and that'd be easier than liquidating on the Bitcoin.
Maybe there's a significant capital gain on the Bitcoin.
They don't want to realize that gain by selling to the open market.
So I'm not sure, but it's definitely one thing that could be done.
So it's interesting.
Yeah.
And so if it takes, what, 10,000 hours, 10,000 hours to really grok Bitcoin, and then maybe it takes another, I mean, just our group alone probably has tens of thousands of hours of study on a strategy itself.
So if there's going to be hundreds and hundreds of these Bitcoin companies, there's no way that our group or even the entire thousands of people watching this show can like study and understand them all.
So is there, I mean, I know you and Mason and Dan, you guys studied like a framework for identifying Bitcoin treasury companies.
Do we have some basic frameworks where we can just be like, hey, if they've got secured debt, we're staying away from those companies?
or what do you think the top red flags are
or how to, I guess, easily navigate this
or do you just go with what you know?
I was talking to Dan today about a framework
or an idea of, I was thinking about theta decay,
but with Bitcoin treasury companies,
it's almost like time and scale makes it safer.
so and as an investor if you get early on in the bitcoin treasury company you're rewarded
proportionately to um the risk that you took right so if you were right in the beginning
at strategy you've been rewarded enormously same thing with with meta planet but as these
companies get larger and as they have the the flywheel in effect and they have attention and
have capital and they can issue securities and they have a capital structure and they have trust
that you know all the things that are important they become safer and in my opinion right now
there's only two or three companies in the entire market which um show those those
of yeah characteristics of being investment grade.
Yeah, I think MetaPlanet was like the most important event really to happen because
Saylor wrote the playbook, but then we don't really know if it's immaculate conception
or not.
Like Bitcoin can only happen once, you know, can strategy only happen once.
But now MetaPlanet has proved you can run the playbook and it does work.
So now we're going to see whether other companies are running that playbook correctly or maybe
trying to skip a step and go straight for the home run.
The companies that try to skip steps are going to get blown up.
I think that those are going to be the ones that are the first dominoes to fall.
The ones that are just following the playbook and are trying to be somewhat prescriptive
in their approach.
you know issuing equity buying bitcoin perhaps finding ways to issue debt buying bitcoin i think
i think they will survive um if they're able to maintain that that model going the one the one
thing about it is that i that also i think plays into a factor of how strategy is able to win we i
think we forget that when they started this interest rates were lower and there was quantitative
easing, right, in the form of stimulus. So they were able, they had some advantageous
market dynamics that were working in their effect just ever so slightly when they first
started. Right now, we have a different interest rate environment. We have a different set
of economic dynamics. We have, you know, I mean, the tariff situation is probably going
to get rectified. We've got other scenarios in place right now that make this a little
bit different for how these companies are going to have to assess it.
Now, back to what Mason was saying, in terms of the flywheel, and this is something I'm
trying to reconcile, is it truly the flywheel if they can't use debt and equity?
Is it a flywheel if they're only using equity?
Right now, Saylor can do the flywheel with only equity because he has multiple levers
that he can pull for the ATM.
Some of these other companies, and Metaplan has some debt that they've used too, and similar.
of these other companies, however, they're not using debt yet. So is that still a flywheel
approach or is that like a more of a dedicated, strictly Bitcoin treasury approach? And we're
saying that Bitcoin is going to appreciate in value. We want it on the balance sheet. We're
going to use that to strengthen our company and invest in the core business and so on and so forth
and becomes like a different flywheel. Like what is the flywheel? Is the flywheel just
accretive Bitcoin purchases going back and forth by different means? Or is there also another flywheel
that says we are acquiring bitcoin the bitcoin's going to appreciate in value that's going to swell
our market cap that's going to give us opportunities to invest back in our core business which will
then increase the sentiment around the stock which will then increase our ability to buy more bitcoin
do you see what i'm saying i think there's two different flywheel models that we can yeah
i like i've been thinking about this and i really think it's a race to get the preferreds and
specifically to get a preferred like stride which is that junk bond uh like preferred and i i think
a few episodes ago dan and i shamed our shared our framework for sorry my dog's barking uh for
what makes a bitcoin treasury investment grade and one of those key metrics was to be able to defend
the mnav regardless of of market condition right so if we get into a bear market and you're able to
sell stride the the junk bond preferred and buy back stock you're able to defend the one mnav and
that to me is a real justification for having a higher multiple and it takes some of the risk away
dan do you have any other thoughts i feel very strongly about that and agree i also think the
game the ball is shifting towards preferreds like ultimately what is the unlock the actual unlock
here it's the arbitrage between the the bitcoin kegger and the fiat kegger that's essentially what
strategy's created and so they've been able to do that in the equity markets by essentially selling
fiat or you know i don't know if you can call it fiat but mstr equity and buying a higher kegger
asset now they're able to sell it's very it's very specific what they're able to sell it's
a 10 kager asset strife or stride for a 30 kager asset and they can do it without any negative
pressure on the equity and that makes the equity that much more attractive and it's essentially
yield on their bitcoin and i know a lot of people are saying they're not getting yield on their
bitcoin their bitcoin isn't productive i'd argue this is the like the craziest arbitrage of all
time and i think if you're a bitcoin hold like this is something really you you can only do if
you have a large stack of bitcoin and if you have the um the pieces in place to issue these preferreds
So I think I really do believe the preferreds are the banking strategy has become has shifted into sort of a financial product offering vehicle or closer to that of a bank than its peers.
yeah i think i've been thinking about a lot as well and i've been trying to figure out
if the bitcoin treasury companies who just buy bitcoin and maybe they offer products and services
and so they've got profits if they're just in a complete completely separate bucket and the
leveraged plays and i think you're right and i only just thought of it as soon as you said it
but yeah if you're going to get into the leverage you have to have a stride because if you're going
to lever up you have to be able to defend your m nav in a bear but if you're just going to be like
um i guess my favorite example is probably like a tesla like if you're just going to offer you're
just going to try to dominate the world with your products and you'll just stack some sats
that's kind of fine too as long as you're uh you know as long as you're you have inflows and you
can use that to make purchases um yeah that's that's a company that's a company that holds
bitcoin in their treasury right that's not a bitcoin treasury company and that's that's the
key distinction here well what's the way that's giving me what's what's the difference a company
that holds bitcoin in their treasury versus a bitcoin treasury company well yeah you're using
you're using bitcoin treasury as like lbe right yeah lb yes yeah but i think like like the pierre
like bitcoin treasury company like that's what they do is they have a bitcoin treasury and hence
they offer a suite of financial products based off of that and that's i think that's the ultimate goal
here for these micros and we'll see which ones can do it and i think i think and really importantly
i think and we've talked about this before but i think we should say it again there's two ways to
defend that m nav and it's essentially bitcoin yield in a depressed m nav in a depressed m nav
environment and the only two ways to do that are either to offer a junk bond to defend that m nav
create leverage and hopefully the price of bitcoin rises or and to defend a sub one end nav or to
have an operating company you can just have an operating business that spits off significant
amount of cash flow such that buying bitcoin with that cash flow increases uh your bitcoin yield
like if you have a significant operating business relative to your bitcoin stack you don't need a
stride you don't need any of that because you have the ability to generate bitcoin yield in a one m
nav environment so uh maybe maybe i want to bring this up for consideration should we be careful
about the notion of defending mnav because you can't really defend sentiment you can only create
the opportunity for sentiment to increase like like kind of like what i'm thinking so if there
if we are in an environment where sentiment is suppressed for whatever reason, right,
whatever variety of reasons, is that still possible?
I mean, I think you're right in a sense, but it's almost kind of like the ability to defend MNav
is what creates the sentiment for the market to not, like, push it.
I think that's an assumption, though.
Yeah, absolutely.
Yeah, I'm not stating that as a fact.
That's just my opinion.
Well, let's talk about the mechanisms.
Let's think through the mechanisms.
How would they defend MNF?
If the MNF falls below one, they issue stride and buyback the stock.
It goes to one.
Right.
So that is the issue of defending MNF.
Right.
And that's essentially what the assumption is.
So let's say that they buyback the stock and they're doing that to, quote, unquote, defend the MNF.
The theory is that you buying back a stock buyback is saying in theory usually a stock buyback increases the equity price because people are saying that because you have strength you believe in the company you believe in the value of the company so you willing to buy back the stock in this model doesn that signal to the market the stock
is the market the company is weak so therefore we need to buy back the stock it's an entirely
different um thesis for the buyback of the stock one that gets pretty like existential like then
you then you get start getting into the territory of the fact that common equity has no claim over
the assets of the corporation and like you could say it's all fugazi and like i don't know i just
think i'm on service right right because what i'm saying is that mnav is sentiment so that will play
into it is what i'm trying to say yeah how the market perceives the action i'm not saying that
whether they can or can't do it i'm talking about the market perception of the action can create
an equal and opposite reaction maybe i think m nav is also a function of an expectation of yield
right and when we're going into a bear market and maybe the expectation is there's going to be no
yield because all of this is going to fall apart the the flywheel is going to you know stop uh and
and then they buy back the stock and they create yield,
that is kind of, that in my eyes,
justifies an MNAV increase, right?
Because you are creating yield once again.
So you are creating yield regardless of market conditions.
And that's what's so key here.
Yeah.
Well, for me, I guess maybe it's
because I think about it differently.
I don't care about Bitcoin yield.
So that's why for me, I perceive it differently.
I care about outperformance.
Yes.
That would be different then.
You don't care about outperformance.
Speaking of outperformance.
So I care about outperformance.
So Bitcoin per share and Bitcoin yield, I don't care about them whatsoever.
I just care about what is the proportional dollar value that I'm getting for every dollar I have in strategy versus every dollar I have in Bitcoin.
As long as that outperforms or that will outperform over time, that is my primary concern.
And what I'm trying to say is that I don't think that the individuals that have the ability to impact this market care about Bitcoin yields or Bitcoin per share.
They care about how they can impact the stock.
So regardless of what action, I'm just trying to play devil's advocate here.
Regardless of what actions strategy takes to defend MNAV, we need to be mindful of the opposite reaction that can occur.
I see what you're saying.
because so in my view yes they can use this to theoretically quote unquote defend mnav
but the flip side of it if i was a market player i would see that as a moment of weakness and i
would attack which is your saying and i would say they're weak already right yeah but i would say
i would say that's a function of liquidity in the market so you're you're essentially saying the
shorts will pile on even if they're buying backs so you're saying mnav's falling sentiments dropping
you don't care about bitcoin yield that's all fugazi shorts are piling on and they can keep
driving the stock down keep driving the stock down liquidity is falling x y and z the only way to
defend against that is to create less liquidity in the market for shorts so correct that's why i think
buying back the stock is actually effective there because you're putting it but it'll be large enough
well that's all i'm saying what would be a large enough volume that's that's what i'm getting at
right so and again guys this is not me saying strategies for guys i'm just trying to play the
devil's advocate here what i'm what i'm saying is if strike strife stride if the preferreds if the
market especially stride are large enough to offset that balance that is golden however if
this were to occur before they have the volume in stride to offset the potential short shorting
volume and to create enough of a of a dis of an imbalance in the in the liquidity to eventually
drive the stock price up and changes and have the sentiment change and so on and so forth
it would need to be large enough to do that so if this were to occur before those those
preferreds and those markets grow large enough that is a scenario where i can see if someone has
my mindset of they're not necessarily worried about i don't think market players are worried
about yield per share or or the uh bitcoin per share or bitcoin yield they're looking for
opportunities to create money-making ventures for themselves if this signals to the if this can
signal to the market that strategy has an effective way to buy back the stock and they can defend the
mnav it that's one side of the equation the other side of the equation is they are in a weakened
position will that attract short interest that's that's all i'm saying so for me go ahead finish
your thoughts sorry yeah so for me as an investor that does not care about bitcoin yield or bitcoin
per share i can easily see a scenario where that happens so you would short so you would feel
comfortable shorting if msdr was buying back i wouldn't i'm saying i'm saying that there are
market players that could and would yeah but like where would you put your money i'd make a massive
but if strategy had a 30 debt ratio and they were buying back their stock sub one m nav was stride
like i've always decided decisions are made by where you put your money i would not be short there
yeah i think a lot of the you're saying that as a you're saying that as an investor not an
opportunistic player opportunistically i wouldn't be short there i i think all the short the the
the opportunistic short sellers right now are trying to drive it to one and then they're out
i mean beyond beyond the the convertible bond guys i i think it's tough yeah exactly like it's
it's tough to make channel said that if it goes to one he's out so but yeah i i mean i think i
think the important point here is that um in a bear market there's always pain right and maybe
this makes it slightly less painful and maybe that's a middle ground that we can come to maybe
yeah let me let me see let me see if i understand it adrian so i was gonna i was gonna i was gonna
chime in oh yeah go ahead right so look you've been signing this whole time i'm just i've been
listening to what you guys have been talking about it's pretty simple number needs to go up
Say I don't care the reason what's happening number needs to go up for MSTR
Same thing for strike and strife and stride whatever the reasons are for this the number needs to go up
Whatever the mechanics of this need to happen. It's clearly obvious
There's too many MSTR shares floating around right now, which is causing a depressed price
Whatever term you want to use depressed or lower price. There's too many shares out there if they have to buy back shares
It's the kiss of death. It just is and the reason why
I got a real Coke. And the reason why it's a kiss of death is because what happens is the reason why a company buys back stocks is a very particular reason. Because if a company is sitting on a lot of cash and they buy back the stock, what happens is it reduces the float that's out there and therefore the stock price goes up. That's a non-taxable event.
because the worst is to say,
let's say you're Apple and you're sitting on whatever,
80 or $100 billion in cash.
If you give that cash instead of as a stock buyback,
if you give that as a dividend,
the investors in the ETFs or hedge funds hate that
because you just triggered a taxable event for them.
They don't want taxable events.
And that's why they do these stock buybacks.
And so what's happening here is,
is that if they have to do a stock buyback,
that's validation that they floated
too many shares in the market.
It doesn't matter how accretive it is.
It signals the market there's too many shares that are out there.
Now, whether you're going to short when it's down or you're going to short when it's up,
it doesn't matter to me.
The number needs to go up.
What I can tell you is that if Bitcoin hits an all-time high two weeks from now, pick a
dollar amount, $112,000, $114,000, and strategy is bouncing around at $425,000 a share, not
good.
And one of the reasons why is there's so many other choices to buy.
strike, strife, stride, whatever. You could buy all the other Bitcoin treasury companies,
no matter how terrible you might think they are, how good you think they are.
That is taking that buying pressure off. And the $4 billion in asset or whatever that's making up
Misty is preventing it from going higher based upon the call options that are on it, the covered
calls. And that is bled out, not from the MSTR shares, that used to be buying the shares and now
let out so now given that does everybody agree that the number needs to go up on mstr shares
and strike and strife and so forth well so i'm what i'm doing yes i don't okay but i don't i don't
want to be that simple with it though what i'm what i've been trying to to think through myself
is the preferred offerings are fantastic i think that they are a way for strategy to create new
markets have different levers they can pull they can defend mnaf i agree with all of that but i have
to take the opposite side to make sure that my thesis is strong now the opposite side of that is
strike stripe and stride they essentially dilute the volatility profile of the stock because people
that would have bought the common could not buy the prefers so you have you've created a larger
market but you've also indirectly pulled attention away from the common stock in a way exactly no i
I totally agree with you because now they have other alternatives to buy.
Right.
Now, in that scenario, what is good and why strategy is going to win long term is because
Saylor is creating an economy with all of that.
With all these different offerings, he's attracting different players to the market
for different reasons, and the market is strategy.
So that's perfect.
However, if we do have a scenario where they have to, quote, unquote, defend MNAV by using
stride to buy the common stock, that needs one primary, I think, buffer. That stride needs to
have enough volume and enough size to absorb enough shares to offset that. So the only reason
why I brought it up is because they can defend MNAV with that, but they need to be able to absorb
enough of the shock and absorb enough of the shares rather to offset whatever
whatever low sentiment environment that they're facing so this isn't me saying
that you know strategy is gonna fail it's it's guys you know or anything like
that I'm just saying that people have have to test their thesis and this is
just me testing my thesis in real time yeah so let me let me address a couple
points go ahead mason i i just want to ask you a question what do you what do you mean by too many
shares like like relative to what relative to what so you have to think about it they floated 20
more shares in the fourth quarter when they bought 15 billion dollars worth of bitcoin
which caused the price to collapse from 540 down okay so they floated all those shares to buy 15
billion dollars of bitcoin was that a once in a a once in a one-time scenario sure but what they
had committed to in the 42 plan that came out in third quarter, which was implemented
in fourth quarter, was you have to realize, so when that happened was they committed to
that for that to take place in three years.
But he did it in approximately two, three weeks.
And so by flooding those shares, because the volatility was 220%, Saylor sold the volatility
buy the lower volatility item, the instrument. The lower volatility instrument was Bitcoin,
because the MNAV means that this is more volatile than Bitcoin because it trades on a multiple to
net asset value. We all get this. So what Saylor did is he sold that volatility and he bought the
low volatility instrument to create a higher NAV. That's exactly what he did. Now, what he did was
he sold more shares into the network i don't own those new shares everybody on this call does not
own those new shares unless they go out and buy them so while the it was still accretive per share
the number of shares increased that you did not own which caused the price of the stock to collapse
guys this is simple i don't know if i agree with that point but great great grant explain to me
this so if you're sitting in november would you have preferred strategy had bought no bitcoin
between now and November?
And would we be trading in a 5MNAV?
I don't think any...
Well, you answer that for me.
And how do you justify a hired MNAV with no Bitcoin yield?
Okay, let me answer two questions.
I believe the first question from you, Dan,
was what would I have preferred?
I would have preferred that he would have waited
until January 17th to see what would have happened
on that expiration date that we were all waiting for,
given the amount that we were expecting,
this open interest that was still in place.
I would have thought that he would have waited through at least the last six weeks of the year to pump that up, to close out the year with a high Bitcoin price, and then to go and then realize those gains on February 1st, then that would have happened for the fourth quarter to realize that gain on the stock.
We know that he didn't do that.
And what happened in Q1, again, the price of Bitcoin was below their acquisition price.
So then what happened is they reported a negative number.
Those were not good.
So those metrics that are now following it, now we're coming into Q2.
So we need Bitcoin to stay above $96,000 and change.
Let's just say it's $97,000.
Hope that it stays at $107,000.
And then we go back to the calculation that there'll be whatever the number is,
a $14 billion gain on the books.
But what we saw by the loss in Q1, which was announced that took place in April, it had virtually no effect on the price that there was an 82,000% loss.
It had no effect on it.
So the flip side is probably to just thinking logically that if they have a $14 billion gain, it won't make a difference.
So now here's the good news.
Here's the good news, what I'm going to tell you.
The easiest way to sop up, and this message is to Saylor and to Fong if you're listening.
Okay.
The best thing is once you're eligible for S&P 500 is to get the S&P 500 inclusion.
And the reason why is because of all the ETFs that will have to buy MSTR shares will suck up that $15 billion or $20 billion worth of shares,
take that off of the market and reduce the shares that are actually being traded.
If that happens, that's the easiest buyer that you will get to suck up the excess shares that are floating around.
There's too many shares floating around.
So, Mason, does that answer your question why there's too many shares?
Yeah, I'm just having a hard time justifying a higher MNAV with no Bitcoin yield.
I don't really care.
Okay, go ahead.
So, okay. The only thing that justifies a higher MNAB is market sentiment, in my view. I don't think that the Bitcoin yield or Bitcoin per share is what justifies the market sentiment. I think that when we saw the run up to 543, we had a lot of things working at our advantage. We had increasing liquidity at the time, and we had strong market sentiment because of what people are now calling a regular...
Hey, let me jump into some of these comments.
So the comment there's here is that I have no MSTR options at all.
None.
I closed out those positions three weeks ago.
Three, four weeks ago, they're all gone.
I have no MSTR options at all.
So if anybody's saying sorry about your leave calls, sorry about your losses or whatever that is, guys, I don't have any.
I sit in all spot shares.
I've already announced what I've done.
I've taken positions in other Bitcoin treasury companies.
and I've done that weeks ago.
So everybody's staying there.
Now the person that talked about the Misty
has a $4.5 billion,
well that guy's right that's what's there and we've seen this happen before years with bitcoin
so any og people know about this that over there is putting pressure not allowing the stock to run
higher and there's too many shares floating around there's no if anybody wants to argue this the
reason why they know there's too many shares floating around because you guys are talking
about stock buybacks the only reason why you do stock buyback is because there's too many shares
that are out there well i i don't know about that because misty and the cover call etfs have to be
net positive they have to be net long all covered call strategies are limited bullish strategies so
they have to have the shares equivalent in order to actually short it so i want to chime in the guy
mstr hi you sold at the worst possible time ever don't worry about my positions okay just don't
Don't worry about them at all.
Okay?
I announced to them, do it.
If you ever want to get on a space,
I'm going to say this to all the trolls
that are going through here in the chat.
Anytime you want to do a space, I'm ready.
Okay?
Contact somebody else
because they only take DMs from people I follow.
But if you guys want to get in a space with me,
let's get on a space and let's talk it through
and we'll have people ask you questions.
Until then, so be it.
Great.
You want to teach the combat over here.
Yeah, I'm fine with combat.
We've been on a call for an hour here arguing about this.
The number has to go up.
It's that simple.
And the way you get it to go up, as you guys just said, is either you buy the shares back
or they get eligible for S&P 500.
And those ETFs become the natural buyers to take those shares out of basically trading
circulation, which could then cause it to go up.
That's the only thing that'll be a big enough buyer to do this right now, because there's
too many other shiny objects in the little Bitcoin treasury companies.
Great. I was trying to get on board with what you were saying about hitting the ATM in November caused the drop. And the only way that I could kind of try to agree would be that selling ATM on the common lowers the leverage ratio. So maybe now the prices aren't as justified as they were.
but why didn't you know why didn't the same thing happen or excuse me why did the same thing happen
in march like we had a forex move and then we had a 50 correction and the same thing happened in
november oh yeah and we and we never bait we never broke i've already talked about this multiple
times we never broke the the uh multiple over the 50-day moving average it was a 2.47 in march what
we had there comparing against itself and now it only hit 2.1 in november so we're having
diminishing returns on the multiple of the 50-day moving average, comparing it against itself. And
that takes into account all the net new shares that are out there and all unknown information.
It's that simple. Now, let's tell you the flip side here. When the shares become hypothecated,
which means there's a short on those, not enough share, I want to use the word short,
there's not enough shares available. These shares are not hypothecated. If anybody goes in my feed
and types grain of salt, types in the word hypothecation, dollar sign, MSTR, you'll see
at the bottom of the bear market, those shares were shorted and they were paying 30% APR to me
as I loaned those shares out. I was the person that owned the shares in the bear market and
loaned it out to the guys to freaking short it even more because I went, as Dan said, when the
pain happened and I went long and I'd made a big stack in there. So now we are here. Go ahead.
What is a company you see in the Bitcoin space, the Bitcoin treasury space, that is superior
to strategy right now because of the way they're acquiring Bitcoin and the way they're managing
their outstanding flow?
If we look at the metrics-
There are people in the comments who are like, yeah, I totally agree with Green.
You know, this is bullshit.
This price isn't going up.
So what would be your alternative for those people?
that's where I'm going to make a distinction between two things. If we look at a base,
there's two types of typically investors. There's either technicals or fundamentals.
The technical people look at the stock, look at the price momentum, look at RSI, MACD,
50-day moving average. The other people that typically invest are fundamental people. And
what they do is they look at the income sheet and balance statement. You guys are talking
fundamentals. You're talking the income sheet, balance statement, what they're holding in MNAP.
So strategy collectively, MSTR, Strike and Strife are the best fundamentals in the market.
But the technicals on MSTR right now suck.
Now, on the other Bitcoin treasury companies, their fundamentals are like, eh, because they trade at a very high MNAV.
So their fundamentals are very expensive.
It's like a high PE ratio.
It's an expensive stock.
But from them, on a technical basis, they have lots of momentum and lots of volatility.
So that's the difference that we're talking about here.
You guys are talking fundamentals.
I agree with you on that, that strategy has the best fundamentals.
But on a technical basis, looking at our price momentum, terrible.
We all agree on that?
Yes, I do have a question about-
Go ahead.
Can I jump in here?
i think this is just a like a fundamental philosophical difference between investor
i consider myself an investor and a trader and i think it's just a difference
of time preference i just have a lower time preference and i'm okay with strategy converting
you know selling some shares and creating bitcoin because if you take sailors you know 20-year
forecast where it's 21 million dollar bitcoin it's a 12 trillion dollar company and that's at no
premium and i'm i think i'm just okay with that in the long term rather than you know going to some
smaller potentially riskier thing and it sounds like you're not okay with it yeah i think that
i'm not what we were talking about had nothing to do with the other lb other companies we were
just talking about how can strategy um maintain their position and continue to grow and and buy
bitcoin and continue with the strategy right and the reason why i brought up these counterpoints
in these devil advocate positions is because as i said i was testing my thesis in real time so
while it opened up a can of worms perhaps it was a good thing to do because the conversation
actually happens so yes yes let me chime in mason to answer this why i'm out of patience
i'll tell you there's a particular reason if we were in a bear market and currently the s p 500
was 20 percent below uh um it's high price i'd be okay but the s p 500 is less than one percent
away from its all-time high it closed today at 6 092. so once the s p 500 breaks 61 50 or whatever
the all-time high was 6200 we're in a bull market and if you're in a bull market and that asset and
an mstr sorry bitcoin is very close to an all-time high and your stock price is not running that is
not good price action the fundamentals may be great i'll give you a good example there are
companies that if i had to make a choice between amazon as a stock and google i pick google every
single time. Why? Because Amazon has a million and a quarter employees. It's one of the largest
employees in the world. So I don't like Amazon stock. Do I use their products every day and love
the company? Sure. But I don't ever own Amazon stock. I prefer to have Google and have one-tenth
the number of employees because humans are very expensive. So that's a difference between looking
at two fundamentals of two good tech companies. We are in a bull market. We're very close. If
anybody disagrees on the s p 500 we have a v-shaped recovery hell seven eight weeks ago people were
talking about the demise of nvidia with open seek adrian what was the name of the company that came
out the chinese company that made some free freaking software that crushed nvidia everybody's
deep seek it wasn't open seek deep seek oh my god that was the biggest buying opportunity for
Nvidia going who bought the dip.
What's the, okay, so what's the message to investors? What's the other, what's the
My message to investors is that you have to look at your allocation, your portfolio
and giving trade the market you have and not the one that you want. And you have to be able to look
and say, are we in a bear market or a bull market overall? Typically with presidential elections
that take place the following year is the bull market for the last three cycles, 2017, 2021,
and now 2025, they're all odd years. The following year after a presidential cycle
is a complete coincidence of cosmic proportions, coincidence. So what I'm saying right now is that
if the stock is not going up and you can avoid triggering taxable events, I'm not giving anybody
tax advice, but in an IRA account, you have no taxable events, whether it's a Roth or rather
a regular IRA account. What I have done, I've already announced it previously weeks ago.
I sold the MSDR on the IRA account and I bought other Bitcoin treasury companies.
Do I have millions of dollars of MSDR stock that's at a cost basis of 22 bucks?
Yes.
And that's in a taxable account.
So those I don't sell, I got to sell those very slowly to take care of the taxable events
that will trigger by selling those.
So for anybody thinks, you know, and by the way, I just see this, NVIDIA is all time high.
Well, I guess you should have bought it on the dip, whatever it was to everybody that's on the call.
Did you buy the dip?
You guys had this massive dip seven, eight weeks ago.
Right.
And it fully recovered.
So if I agree that the number needs to go up, if we get a bear market or another bear cycle in Bitcoin, what does strategy do to make the number go up?
I'm going to be real clear.
If there's a bear cycle in 2025 and Bitcoin falls to-
2026, 2027, whatever.
I don't care.
2026, 2027, guys, I'm not going to be on the call.
I hope you guys, I hope we make enough money in 2025.
Guys, look, we started, this is episode number 31.
It's over a half a year and I've been in the trade.
It'll be three years in January.
It's not like I'm a new guy in this, right?
I don't care about, right now, I don't care about 2026.
I care about July. I care about the price of Bitcoin at the end of June so we can ascertain the gain that that MSTR will have. Right. We all care about that. I care about July 20th. That is the cutoff. Right. That is the cutoff for the digital asset working group that's running for the president. Mason, do you agree on all these points? You care about June 30th, correct? The price of Bitcoin.
Oh, yeah.
Yeah. OK. So we hope that the price.
I care about the price of Bitcoin every day.
Right.
But June 30th is important.
This is a lot of Bitcoin.
A lot of fucking Bitcoin.
Right.
Because then we know what the gain that strategy will then report.
Correct?
Yeah.
Okay.
July 20th.
That's when the working group has to come.
They have their six-month site, their six-month timeline to reveal what they're going to do
for the strategic Bitcoin fund and sovereign, whatever.
The two things that they're going to do.
We care about that also.
The strategic Bitcoin reserve and the shares and the Bitcoin that they're going to keep.
We also care about the Genius Act being finished and the stablecoin provision that's in it also.
We need that to be signed off by the House of Reps and then signed into law by Trump.
If that happens, those will be your catalysts.
The Genius Act, stablecoins, June 30th and July 20th.
Hopefully, we all agree on those things, that those things happen and the number continues to go up.
We also hope that all the net new companies that are coming in that are buying Bitcoin, but not buying it at big enough numbers. You got Metaplanet that, I don't know, purchased whatever, 1,100 Bitcoins. That's great, but strategy has almost 600,000 Bitcoins. So it's a very small number. It's not big enough to drive the price of Bitcoin up.
But if all the other big companies start buying this and it catches on, I want to see the positive, what do you call it, price action.
And it's all about eligibility for the S&P 500 to sop up those shares that are floating around.
I think I've been a completely rational person talking about this.
I'd like to talk about some other things, but I want the stock price to go up.
Yeah, that might be a good segue.
Go ahead, Adrian.
Were you going to respond to that?
Oh, no. I think I opened up enough of a can of worms with my comments, so I'm just going to let it ride and we can move on to a new topic now.
I just want to say that y'all wouldn't act like this if Dad was here.
I'm leaving the chat and you guys fucking acting a fool.
I have a great chart I want to show.
Oh, yeah. Do the chart and then maybe we'll talk about Prague. Happy fun stuff.
Cool. It's on the shared screen thing.
Oh, shit. Thanks.
uh this is strike percent of weekly volume back on um some fundamental stuff here
uh I think it pretty interesting uh when you look at it in terms of strife volume strike volume so these are the weekly volumes and strife and strike i use them liquidation preference times number of shares traded every week since strife and strike atms return online and um so it not totally accurate but it accurate within a few
percentage points and then you can see the weekly atm in both strike and strife and the final columns
are the final columns are strike percent of weekly volume and strife percent of weekly volume and
And this is a super key metric because obviously something we saw is that strategy wasn't really able to ever sell more than 7% of weekly volume in ATM comfortably.
And what they're able to do with these self-healing products that Ben talks about a lot is that they're able to ATM a huge percentage of the weekly trade volume in these two preferreds.
So I think if we just get a small increase in ATM or of trading volume in Strife and Strike,
those ATMs will continue to tick up in a really significant fashion. So I don't know, I just think
it's a really cool, if you look at these weekly volumes, you can see how well they're able to push
these products into the open market without having an adverse effect on the price. Like look at
Strife, look at Strike, they've traded flat for like three weeks and you can see their percentage
of weekly volume 30 31 18 like these are massive numbers and they're really going to be able to push
these products out once there becomes any substantial demand uh for them and i've been
you know doing my best uh to increase that demand so i think um that's exciting looking out on the
horizon yeah just ballparking it um is do you have a projection for how many bitcoin they might
accumulate just from preferreds i have yeah i have a full i have a um sheet or let's not get
into it now but yeah yeah we'll say that for another time yeah but it's massive right they
have at least they have eight to twenty billion worth of uh room on their balance sheet for
preferreds depending on upon whether or not the converts convert i assume the converts will
convert during the next run-up in stock price they won't issue more maybe ben thinks they'll
issue more. I'm not sure, but it all comes down to demand for the preferreds. And I'm just going to
reiterate, I'm going to say it again. What is strike? I mean, you're getting the ability to
buy one MNav MSTR with an 8% fixed coupon and perpetual upside on the equity. If you have cash,
if you're diversified between MSTR and cash or a bond or something, this is the product you want.
So it's just really, really attractive.
And the fact the way it's priced now, I did a little post on it earlier,
but it could perform on par with MSTR up to $650, $700 MSTR.
So that's really attractive with very little downside risk.
So that's really something to look out for.
And then obviously there's ATM risk.
Like if ATM suppresses the price, then maybe the yield stays high.
But there's just a lot of a lot of upside with that product.
yeah i mean the thing with the thing with all of this um and to everyone in the chat to everyone on
the call we all well let me be more specific here most of us do believe in the long-term
viability of strategy right but if we are the investment grade podcast i do believe we have
to test our thesis so there's nothing wrong with that so grain providing that perspective and me
providing my perspective and dan and mason providing their perspective is exactly why we're
here. With that said, I think strategy is at 391 right now. So it's not as if the investment thesis
has fallen apart. It is just good to test your investment thesis, right? So all this conversation
is great. And I think Dan's point about all the prefers is very well taken. They are very powerful
tools that I think the market is grossly underestimating. What we just need to make
sure that we are aware of is that we fully understand how those tools can be levered and
all the counterbalances that exist with those tools. So this is all a fantastic conversation
in my view, though. Yeah. And my thesis has always been basically what Saylor said about,
I think it was from the mobile wave. He said, you invest in something when it's disrupting
and it's the clear winner. So when Netflix put Blockbuster out of business, when Apple came out
with the iPhone and put Blackberry and all of those companies out of business. And so with the
prefers replacing the convertible bonds and with stride giving that extra lever for the bear market
i've never been more bullish so that's that's you know my thesis really hasn't changed and it's
really only gotten better right so i'll chime in here with something we can move on to the next
topic so a year ago at it was back then it was micro strategy world in las vegas i went over to
talked to Saylor the first time I met him. And I said, I have a question about Andrew Ross Sorkin
and various other people that interview you on TV. And I said to him, I said,
do these people get it or don't get it? He goes, yeah, they get it. They actually do get it.
But they can't have me on TV saying, Andrew Ross Sorkin can't be on TV. Hey, I think Bitcoin is
great. Michael, tell us about your Bitcoin position. Yeah, we think it's all great.
They have to play the devil's advocate. Michael, tell us why you bought Bitcoin. Tell us why this
is good. Tell us why it's going up. Oh, really? It works like this. You're using converts. Why
does converts work? And so what happens is, is that gives some form of controversy, whatever
you want to call it, contrived or that comes out. It comes across that he has to defend his position
and makes for good television. Okay. So on this call, what we're talking about over here is I let
you guys talk for an hour. And then I chimed in and I said, look, the number's got to go up.
It's that simple. And my belief is this. And I think we all agree the number's got to go up.
And Mason, like I said back to you, if we were in a bear market, if it was 2023, right,
we don't know who the president's going to be. Or 2022, after he got through the crap
that happened with FTX and all the other crap with SBF and Terra Luna and all that blow up
crap that happened. So 2022 was miserable. 2023, nobody really wanted to buy it when I did.
And then it goes up. And then 2024, we have an awesome year. We get to go thinking about the
president, doing the Spock Bitcoin ETFs. Everybody knows the history. On January 11th, we get all
these tailwinds. We get a double top in 2024, which is all great. And now we're in 2025,
which tends to be, like I said, 2017, 2021, and 2025, the year after the halving. Now we want
the price to continue to go up because it should be a bull market. And we're very close on the S&P
500. So from that perspective, you're right. I am not patient in this particular year. In 2026,
2027, I'll be patient, but I'm not going to be arguing about whether or not MSTR is great.
I'm just not going to be here. I'll be chilling somewhere else. And then I'll come back in during
the next cycle, whenever that might be. And if the price continues to go up, then so be it. Then
will be great but as of right now i want to make enough money in 2025 that i don't have to worry
about 2020 well i don't really need to worry about any of the years going forward but from that
perspective i want to make enough in 2025 to make 2026 and later more comfortable well i think yeah
everyone is excited to do that with you gran with that's it can we talk about prog can we talk about
frog yes that's that's that was our next um that's our next topic so we're finally getting to the
the second topic I think on the agenda second topic and I'll just tell us on
track what are you doing yeah yeah Prague I got there a day earlier than Dan the
city is gorgeous they vacuum the streets at nighttime they pressure wash it the
streets are beautiful the city is gorgeous the food was great relatively
inexpensive because they're on they're on Czech Krona they're not even on the
euro. Okay. So from there, the prices were reasonable and the shops were great. Everything
was awesome. We saw the, I posted pictures. It was awesome. So what about Bitcoin? Went to the
conference there. They're hardcore Bitcoin people that are there in Europe. And especially the ones
that went to this conference. The leadoff presenter said, hey, everybody's here for number go up,
but we all know this. Great. Now let's talk about Bitcoin core code. That was the leadoff
presentation on Thursday morning. And for the whole morning, they went through, yeah, they talked
about the Lightning Network and wallets and how do you build applications on top of it, almost
whatever, I'm making up the percentage. 50% of the presenters, sorry, the exhibitors in the exhibit
hall were made up of Bitcoin mining companies, Bitcoin ASICs, rigs, cooling systems, equipment,
anything around that. I would say 50% of the exhibitors were based upon that.
There was a t-shirt. You could buy a Bitcoin t-shirt, but you can only buy it with a Bitcoin
lightning wallet, which I did not have set up. To be honest with you, that was pretty clunky to get
that set up. So I did not get a t-shirt paid with Bitcoin. I could have paid in Bitcoin,
but I couldn't do it because I didn't have a lightning wallet set up. So they were really
hardcore. You could pay for all the food in Bitcoin. And it was announced, I did a review
last night, you can see my space, 500,000 euros were transacted through Bitcoin to buy various
things at the show, whether to buy the tickets, to buy the food, to buy tchotchkes or t-shirts,
all that stuff, approximately 500,000 euros worth of Bitcoin were used. So they believe in Bitcoin
as a currency over there and they believe on using it. Okay. And the Bitcoin treasury companies,
I don't have a Bitcoin lightning wallet. Yes, that's true. Then the next day,
people talked about it. Sailor talked. There was a Bitcoin for Corporation event,
invite only. So even though I had an enterprise ticket, which was the middle ticket, not the whale
ticket, we had to get in to go to that event, which was invite only, but no cost to go in.
And Dan was there with us. We met with various other investment bankers. And I will not reveal
the names, but we were offered different positions in pre-IPO, different Bitcoin treasury companies,
let's just say it. And those are quite interesting. I have done private placements. I'm an accredited
investor. PE, private equity is really not my thing. I prefer to get in and get out. I don't
like some of the lockup periods. There's lots of, you have to read a lot of these different
prospectuses to do that. So we were offered that. It's not particularly something that I do.
Dan was there. What else could I say? The Bitcoin treasury, there was no room there when Saylor was talking. The room was completely full. We talked to a lot of the CEOs of the current Bitcoin treasury companies multiple times, major crypto Twitter or Bitcoin influencers, 100,000, 400,000, 500,000, a million followers. We talked to a whole bunch of those people. We talked to OGs and that's where we were. So Dan, you chime in. What was the Bitcoin investor day like?
It was good. It was really good. Definitely lots of insights we heard about what's kind
of going on in the Bitcoin space. But I do have to give Adrian credit, and he's been
doing a lot with these different Bitcoin treasury plays. So I think we spent a lot of time with
the AltBG guy. I don't know if you talked to him at all, Adrian.
I've talked to him for a little bit, yeah.
yeah yeah so it seems interesting I mean I think the most interesting product obviously they're the
only crew doing um doing the Bitcoin denominated converts what's your take on that Adrian so I
have to be fully transparent I haven't looked into it greatly um so I have I don't have a
a fully fleshed out view on it do I think it's a novel approach because I believe so I believe that
they are attempting to do the the um converse in the eurozone and there's some different dynamics
that i'm still trying to wrap my head around and how they're going to execute it but if it works
this comes back to what we were discussing before with adding leverage and what what is a true lbe
versus what is just like a bitcoin treasury company if they can execute it i think it makes
sense but i need to wrap my head around it because it's not as straightforward as the converse that
strategy is doing. Yeah, it's pretty interesting. They're injecting. So the company gets Bitcoin in,
they don't have to convert into Bitcoin with the fiat convert capital. They take on no term risk
essentially, right? With strategy, they're pledging a principal coupon payment on a specific
date in the future to their equity holders. Whereas the AltBG is pledging essentially Bitcoin
back to their shareholders. So what do share, sorry, not shareholders, they're convertible
note holders what convertible note what's the bond profile for the convertible holder right they have
bitcoin downside with equity like upside um and what is the risk for those holders well in the
case of strategy right you have that that bond floor the principal return to you at a certain
point in time so that's your floor and your upside is the equity here your downside is bitcoin your
upside is the equity the risk you're taking on is that bitcoin outperforms the equity so there's a
There's a real scenario in which Bitcoin outperforms Alt-BG spot shares via maybe too much common stock dilution.
And what you get is you underperform the Bitcoin you initially were holding So that the risk you take on however for altbg it a fantastic deal because again they don have any sort of liquidation risk when it
comes to their to their bitcoin so it's another way of doing it and clearly it's been working for
them i think anything yeah so yeah i'll pass this one over to you grain i mean we heard a lot about
the equity to equity market dynamics in england in the uk and that was an interesting conversation
we had with james van stratton um regarding you know kind of how people are thinking about
leverage bitcoin equities why people are buying um companies like coincilium with so much fervor
and what sort of the exposure um people have to bitcoin related products is in the uk
yeah and so so let me let me say why i made the face so um
Look, you get your news from wherever. And I thought in Europe, there's a lot of rich people. And I thought that Europe was, I thought Germany was a powerhouse worldwide. And this is where I'm going to get very quickly to what Dan just said about the UK market. It was brought to my attention. We were there and Tad was there. And Tad just said to me, I said, well, there's a lot of rich people here. And he's like, no, you're not getting it. I'm like, what don't I get?
If Germany in per capita GDP was compared against U.S. states, where do you think it would rank? And I'm like, I don't know, probably top 25%. And the math is Germany's per capita GDP is $55,400. It would be the 46th state in America, which means it would be below Kentucky, but above Alabama.
And then you get the UK would be ranked the 49th state in America in per capita GDP.
So when I went to Prague, what I realized was there's a lot of beautiful people there that work there.
There's a lot of tourists that were there. The city was gorgeous.
The people were dressed phenomenally well. And there's a lot of beautiful cars that were there.
But then when you look at the GDP per countries, they're in terrible shape.
I mean, if you're down by Alabama and Arkansas, and I'm sorry for the people that live in those states, but it's just a ranking, that if you're below Mississippi, not good, right?
And so when I'm talking about this, then we talked to James.
What he basically said was, is that a lot of people in the UK don't even have brokerage accounts.
They have pension accounts and they don't have brokerage, even though these are available for them, tax-advantaged accounts, that they don't even have them at all.
They're basically real estate people. And so what happened is, is that when in the UK,
you have a SIP and ISA accounts, and I'm not an expert in this, but what I can tell you is that
the people there, they are at least five to seven years behind the US. So everybody that's in the
US, you've already won. The fact that you're on this call listening for an hour and 39 minutes
means you've already won. If you've been in MSTR for more than a year, you've already won. Take
your victory lap, right? You're so far ahead of the rest of the world, specifically Europe,
there's no comparison. And the reason why MetaPlanet shot up is because of the NISA account
that's in Japan allowed them to easily buy the stock in their retirement account. And then it
basically it trades tax deferred. So you take it out. Any country that has that and there are
people that live there that do this have this massive advantage, but they have to do
an educational background to explain to people that you can actually make money in stocks.
But the only stock that people are getting excited about, and maybe that's hyperbole,
are the Bitcoin treasury companies because the returns are so great. So if I put in 5,000
euros into it or pounds or whatever's available in that local currency, you do that and it does
a 5x or a 10x, it changes your life. Totally does. Just like what happened to me in 2017.
team. So that's the difference. And so when we had these conversations of what's going on in Europe,
I completely, I was wrong. I did not understand where Europe was in relationship. I think Germany
is great. They make awesome cars. But then when I found out about their GDP, shocker to me,
I did not know this. And when I heard that, I was like blown away. And that altered my perception of
where we are in America. So everybody that's listening on this call, you've already won.
whether you agree with me, don't agree with me, hate me, like me, whatever it is,
the fact that you're on this call and you know this information that we're talking about
compared to Europe, you're five years ahead of them.
And in Bitcoin terms, comparing that to the real people,
you're 20 years ahead of everybody else.
And if you have more, I'm just making a number of,
if more than 25% of your net worth is in Bitcoin,
Bitcoin treasury companies and so forth and derivatives,
iBit, Misty, whatever, you already won.
Compared to the rest of the world, you've already won.
You're that far ahead.
So I think that's where we are.
And when I heard this information,
and it's very different when you go talk to people in person.
You're listening on a call.
And that's why I like spaces,
because I could take questions verbally,
hear that other person talk.
But when you go, I recommend that everybody goes to a Bitcoin event,
talk in person.
And if you can present your case in less than 60 seconds to meet somebody and say something really smart and intelligent, you'll probably learn a lot more than you will on any space.
And with that, I mean, I thought Prague was awesome.
I would love to go back again.
Yeah, I had tons of FOMO.
As soon as I saw everybody saying they were headed to Prague, I was like, I need to be there.
But there's always next year.
Hundreds of people watch dance shows.
I'm like, you have to see the clock.
the astrological clock that's 600 years old, right?
And the thing runs and it's exactly right on time
and has this cute little thing
that it does on the top of the hour.
The important part is there's 400 people
standing there watching this for 30 seconds
and then it's done and it's just awesome.
And so anyway, with that said, Prague was great.
We went to a bunch of parties.
People saw we were out at the four o'clock in the morning.
I mean, and I felt safe.
I walked home.
I did not take an Uber.
I walked home at four o'clock in the morning and they're vacuuming. I swear to God,
they're vacuuming and pressure washing the sidewalk. It couldn't get any cleaner. Oh,
and homeless people, no homeless people. I saw three beggars or four beggars in all of where I
walked around Prague and I was walking 20,000 steps a day. I saw four people begging for money.
That was it. And not a single homeless person. Now there's got to be homeless people in Europe.
they just put them someplace i don't hopefully that doesn't sound bad but it felt a one-way
ticket out of prague yeah it just felt great to walk around the city and then we went to this
great event the events were great there was lots of americans there the bitcoin treasury companies
and that conversation was a separate group that was 250 people maybe it was viewed as a curiosity
it was not viewed as mainstream don't anybody think that this is me sailors got four million
followers, we go to Europe, I would bet his followers are one-tenth of one percent European.
I'd love to see the geographical makeup on it.
Was it more Bitcoin only than Vegas?
I was kind of guessing it would be.
Bitcoin only.
Yeah.
Very much so.
Yeah.
And they talked about it.
Right.
So that was a great event.
I believe there'll be one in the fall.
I mean, flying, there's a bunch of money and doing that.
But the takeaway is it was a great experience.
Dan was a great traveling partner.
I was there with my buddy, Plank.
And so we talked, the people that we were surrounded by, Dan, how many investment bank,
how many people that, two people talking to us about particular deals.
And then we went to a bunch of places with two ex-investment bankers with us.
So it was the best of both worlds.
It explains, we'd hear something and then we'd ask them, great, can you tell us how this actually works?
And it was like, it was literally like Latin.
I'm like, that's how it works?
I have to go think about this because I'm more of a stock investor.
I'm not a private equity guy.
Is that fair, Dan?
That's fair.
And I think one thing I heard to reinforce a lot of people's bullish sentiment was there are a lot of people that are excited about a lot of different companies.
But one thing I did hear a lot about was I have an MSTR core position and I'm not selling it to buy these other LBEs.
I'm adding to my stack with the different LBEs.
So a lot of people are excited about all the Bitcoin equities.
And that's something a lot of people aren't thinking.
You can be excited about all of them.
So that was really cool to hear.
You can.
And I want to go back and say something that's really important here.
Because of my age, I have a large IRA account, whether it's a Roth IRA or regular IRA, I have both.
And so, and there's a weird way I was able to do the Roth IRA.
I did not do it as a backdoor Roth contribution.
But the important thing to understand there is that even though I own MSTR in both, and
the MSTR position was way bigger in my IRA account, I could sell that without triggering
any taxable events.
In effect, it's like living in Dubai, right?
Or Puerto Rico, even though I don't live there, to sell that and go chase other higher volatility
things.
But in the straight brokerage account where that would trigger taxable events, I have
a large core position at MSDR, which I'm going to keep and I'm going to sell that as time goes by.
So again, I'm the same person, but on the same equity, I have two different views of how I
invest in it or trade in it based upon the type of account that it's in. And so any country that
gives that choice to people, those countries win. Any country that does not do this loses.
and you can't buy.
Oh, the other crazy part was
it's incredibly difficult to buy Bitcoin in UK, right?
When we heard that, Dan, I was like,
what do you mean it's difficult to buy Bitcoin?
They're like, well, don't you understand
about what we just said?
I'm like, I don't get it.
You would ACH the money or wire the money
to a Bitcoin exchange, buy the Bitcoin
and put it into a hardware wallet.
They're like, no, that's really hard to do.
You could do that in America for the past,
whatever, 13 years.
so that's just straight bitcoin so i i can't i i did not realize it was like that in europe
and i don't know about all of europe but where i was there so anyway i hope that's a good feedback
for the people that are going on what we saw so it was it was a great a great trip um
mason you doing all right buddy yeah do we have any more um analysis
no more analysis
I'm dropping off
you guys are great
take care
we're almost at the 2 hour and 50 minute mark
you guys are great
I like being
if I have to be the devil's advocate
that's fine
make this a little bit exciting
nobody wants to show
that's all great
let's go home
drink a bunch of beers
that'd be pretty boring
so we have to make it a little bit lively
every once in a while
oh yeah
the beers are going to get drank
you guys are gonna take care guys have a good night bye thanks green later thanks all right
yeah it's you know it's 11 48 so we can probably just take a look at the um the s p 500 uh
spreadsheet real quick and then we can do numbers exactly so that and we can look at the mstri the
chart the the all important chart to close out the night and ms and mason can do you have that one
it's my favorite show okay cool so uh bitcoin price today when i when i looked was 107
uh that leaves us with this hurdle to get through which is to erase the last four quarters of
negative eps we got to come up with five billion and at the current price we double that so we would
would have to drop to like below 96 to not, you know, trigger those qualifications for S&P 500.
And of course, there is still the committee hurdle to get through. But I think most of us
think that that's just an eventuality. They probably wouldn't be able to delay it by more
than one quarter. And the longer that they kick the can down the road, it just means that strategy
gets in at a higher rank.
So that's going to be another benefit
to the higher market cap and all the ATM selling.
That's probably an unintended consequence
that maybe some people didn't think about
is that giant market cap is just going to put them
so close to the top that the passive inflows
are going to be pretty nice.
Yeah, you got to see this round.
Like this is it.
We've been waiting for this part.
You should mute.
Okay.
Yeah, this is it.
This is part of the trade we've been waiting for.
I mean, it's going to be really, really exciting.
There's still a little bit of echo, guys.
All right So we do moon math real quick and then we just do final thoughts And I was going to try to pull an all but you guys are lightweights It fine
So the moon math with 592,000 Bitcoin, 107 price.
We've seen this chart before, and it just gets nuts based on different MNAVs.
But the one thing that I really think people should do, and I think this kind of solves the debate or any of the FUD that anybody wants to talk about, and it could be proof of reserves.
It could be whatever the hell is trending on Bitcoin Twitter.
and if your model is 150k Bitcoin with a Forex MNAV
and you think, okay, this other company has proof of reserves,
so I think we should ding strategy,
then put into your valuation model
what percent chance you think proof of reserves puts them at risk.
One percent?
So now you're going to change your valuation from 1109 to like 1098, right?
So that's really all you have to do is plug in your assumptions.
And if you want to take the valuation model and ding it by a few percent based on what you think that level of risk is, that's really all it is to it.
I don't think it's a binary thing where it's like, oh, if strategy doesn't do proof of reserves, I have to just exit the entire trade.
Just build your price targets and keep it moving.
Yeah.
Do you guys mind if I pull up the MSTRI bit here?
Yeah, go for it.
We're done with my charts.
Love your charts so as always.
actually while you're doing that this is actually jeff's spreadsheet and when he sent it to me
it was like a six-year-old walking into freaking disney for the first time i was like there's 75
tabs on this thing and i'm just like trying to reverse engineer all the calculations like
you know when a sucky car company orders a tesla just so that they can rip open to the hood
and like see how it works and figure out some real engineering is that's that's what i've been doing
so um yeah you're gonna sell it online for a profit yeah exactly yes i thought about it yeah
i thought about it i could just auction the spreadsheet off in the comments and
and just like never work again exactly retire again for real so like so sell subscriptions
and then buy bitcoin with it and then uh you'll have like a five m nav pretty soon you'll have a
five and if you buy mstr 1080s you could have a treasury company that competes with ours yeah
for real uh what's the m nav on this right buddy it's gotta be pretty big
because it's pretty high it's pretty high but don't dilute it so yeah um but okay this is mstr
ibit that for anyone who doesn't isn't familiar with this chart it is mstr price and ibit and uh
this is a weak attempt at the 200-day moving average in the teal line. It doesn't go all
the way back. So you can see we had nice movement upwards. We had that blow off top. I think people
have to stop thinking about when we opened on that one day at 530 as an actual price.
That was a five-second price and then it proceeded to fall 20% that day. So the way I think about it
is the real all-time high is around $420 a share. And we touched that and then we collapsed with
the chain of coming out and short reporting uh we fell down to the 200-day moving average which
we've been bouncing off in a very weird eerily fashion and sailor essentially shut off the atm
right at that bottom along the the 200-day moving average will that will we continue to trend up
and towards the right i mean so long as they continue yielding bitcoin per share uh so long
as the equity likes a one eight one seven one nine m nav i think this will continue up to the right
Are we in a horizontal channel above which we'll break out?
Josh has said that as the sell pressure in the common stock equity diminishes, we could see higher Ibit ratios exceeding seven, which is obviously something we're all looking for.
I think if we do hit an 8, 7, 8, 9 MSTRI bit ratio, that's synonymous to three, potentially, that's three plus MNAV.
We're at 150 Bitcoin and three MNAV.
You people will all be very wealthy.
So I think for all those reasons, things are looking really good moving forward.
And I'm on calls.
And setup's not bad, especially with the no ATM.
It's clearly had an impact on the stock.
And I was one, can we stop sharing this here?
I was one to say that the common stock equity doesn't matter for the price.
The ATM issuance doesn't matter for the price.
What I didn't understand, this is something Ben helped clarify for me,
is like, while the common stock ATM is only 2%, 1%, less than 1% of the total daily traded volume,
it's a narrative thing that drives the price down.
But not only does the narrative drive the price down,
but then people will come into the market, big players,
and what they do is they put pressure on the equity by shorting it with lots of money.
And it seems like it's a simulated sell pressure on the equity. And everyone says it's because of
the ATM, but it's not. And it's just down to pressure. So I think there's a lot of
smart participants shaking retail out, using the common stock equity as negative optics,
and then using billions and billions of dollars of short interest on the stock to keep the
pressure low. And so for all those reasons, I think it's cool that Saylor has taken his foot
off the common stock ATM and he's looking to drive that ATM higher. Clearly that's the signal
he's sending to the market. And even just a change, right? We needed a change. The MNAV was stuck very
low. And so any sort of change is exciting moving forward, especially with the big catalyst on the
horizon. Yeah, I'm loving no ATM uncommon. Yeah, I would have to agree. And if you
look at the MSTRI bit. I mean, right now we're in a consolidation phase, but it's a very volatile
chart. And you have to notice like the long-term pattern is we stair step up and then go sideways
for, you know, long, long periods of time, eight months, you know, at least. And that's an attempt
to to wear down patients make investors make retail uh sell shake them out and uh consolidate
and buy lower attempts from the market makers so um i'm i'm personally bullish i'm i'm also
long-term bullish i mean if you are looking at sailors figures for the the 21 million as i said
before that's a 12 trillion in 12.4 trillion in 20 years and that's that's 100x from here and
risk adjusted i don't think you're going to find anything better in the market
mason i'm going to be a billionaire before you mark my words
hey at that point i don't think the dollar will mean much so yeah yeah we're gonna play it's about
who has the most bitcoin and that's uh that's important to remember here if you're chasing fiat
you've already lost should we do final thoughts oh yeah go ahead dan let's do adrian first yeah adrian
first you're muted um yeah no final thoughts i think that i still think overall we're in a great
position i think that bitcoin is about is going to uh rip into the end of the year i think that
um strategy is going to do very very well at the end of the year but um i still think that with all
of these other companies that are coming out right now, it is good to make sure that we
don't get lost in all the chasing the rabbit. And even with that said, continue to test
your thesis when it comes to strategy. All things considered, if you look at where we
were two years ago and then where we were a year ago and where we are now, I think that
it's quite evident that the strategy, that strategy strategy is working. So there's no
reason not to be bullish, but bullish for perspective is always, is always good. So
we just have to sit on our hands and wait for the ride, man. So S&P 500 inclusion is likely coming.
Bitcoin is going to do what it's going to do. We're all going to make the gains. And then we're
just going to do it again. And then again, and then again, and then it's just a matter of how
many how much how much gains that you make in time and how long can you hold on to the ride and i think
that um i really think we're in for some fun in the next coming months and years and i'm excited
to be part of it right on go ahead dan great um i think it's easy to get frustrated about price
action and talk about price action as if it's a thing and unless you're a moment like we hear i
I entered strategy with a fundamental view on equity.
And that's the only way I've been able to make money in markets
is by having a fundamental view
and creating, having a fundamental view
and then positioning in that direction.
So that's what we continue to do
is have a fundamental view and change our outlook
and update it on these leveraged Bitcoin equities.
So I think getting angry at prices or becoming frustrated
and then throwing your hands up is no way to invest
because it's very reactionary.
So we'd like to see where the ball's going
try to position in that way if bitcoin is still below its all-time high strategy is hovering above
its what i consider its real all-time high of 420. if bitcoin's at 450 and strategies m nav compresses
to one um i think there may be cause for concern uh until then uh i'll be long calls and i think
the common uh preferred equities sorry the preferred equities are undervalued um so it's
not i don't think it's time to lose your shirt oh yeah uh volatility is gift to the faithful
sarah says that right um the main goal right now should be accumulation accumulation of bitcoin
accumulation of strategy you know this at least this is my perspective and there are some exciting
companies that are up and coming and i'm looking into them and i think everyone should do their due
diligence it's going to get very loud i think bitcoin is um i feel like it's about to go higher
i think we can all kind of feel that and and maybe that's uh maybe that's an indication that's not
but um hold on to your shirt and uh make sure you're you're doing everything from a rational
position not driven by emotion not driven by fear and greed that's where i've gotten into the most
trouble in the past is by playing into my emotions and not going based off of what's rationally in
front of me oh yeah uh for me i think this this discussion while it seems like it's you know
maybe a little a lot of back and forth everything that this group is saying is intentional
like even down to the thumbnails that justin is creating like you know he's putting symbolism in
there and he's putting like the zombies from wall street and the little nods to texas getting the
treasury and you know all of that stuff and the reason why i used tsunami in the agenda for
this onslaught of bitcoin treasury companies and etfs popping up is that if you've ever seen the
videos of like a tsunami that's about to hit the the ocean actually gets sucked out into
like away from the beach and everyone's just standing around trying to figure out what's
happening and that just kind of feels like the way that ivy is being sucked out right now and
when you see that sign happen it's time to run away from the beach because the tsunami is coming
and so i think bitcoin's gonna rip uh ivy's gonna come back and it's gonna be a wild ride
so i think we're going higher that's for you just so late so we have to say i have to say
everything you've just watched none of this was financial advice although it may have been awesome
oh shit i forgot to do the tim video didn't i i just didn't know what i don't know yeah maybe
tonight we were giving financial advice yeah really some not financial advice advice thanks
mason thanks for keeping me honest man all right with that yeah i think we're going higher
and uh thanks for everybody tuning in see y'all