MicroStrategy offers asymmetric leveraged Bitcoin exposure
The guest presented a highly bullish case for MicroStrategy, viewing its corporate financial engineering as an intelligent vehicle to accumulate Bitcoin using cheap fiat debt.
The argument
He defended the company against 'Ponzi' accusations, explaining that its 'Stretch' preferred stock structure (paying an 11.5% dividend) successfully accrues more Bitcoin per share as long as Bitcoin's annual appreciation outpaces borrowing costs. He projected the stock could reach $1,000 from its current $120 level.
The thesis, stress-tested
✓ What validates it
- ✓Bitcoin annual appreciation remaining above the 11.5% borrowing cost threshold
- ✓Successful issuance or management of the 'Stretch' preferred stock without diluting equity value destructively
▸ Risks discussed
- ▸Risk of rapid bankruptcy if Bitcoin prices fail to appreciate or decline significantly
- ▸High dividend obligation of 11.5% on preferred stock requires flexible capital management
Hear it yourself
"I found, you know, historically, predicting things in timelines is kind of a mugs game, and I've been wrong an awful lot as as is everybody. Nobody really knows. But the math keeps on marching relentlessly, and I do feel still like it's within the next year or two, but it could be longer. I mean, it it certainly could be. They're they're pretty good can kickers, and I'll say, you know, I thought it was coming when Silicon Valley Bank failed in 2020. I was thinking, okay. This is it. Here we go. This is it. Okay. And and I hadn't the book wasn't out at that point, but but I was wrong. You know, they they patched it all up and off we went."
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