{"id":176694,"date":"2025-06-11T21:33:14","date_gmt":"2025-06-11T21:33:14","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/176694\/"},"modified":"2025-06-11T21:33:14","modified_gmt":"2025-06-11T21:33:14","slug":"saylors-play-for-100tn-corporate-bond-market-is-complete-financial-gibberish-says-legendary-short-seller-dl-news","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/176694\/","title":{"rendered":"Saylor\u2019s play for $100tn corporate bond market is \u2018complete financial gibberish,\u2019 says legendary short seller \u2013 DL News"},"content":{"rendered":"<ul class=\"list-outside pl-8\">\n<li>Strategy is now offering preferred stock to buy up Bitcoin.<\/li>\n<li>The company holds 580,000 Bitcoin worth about $63 billion.<\/li>\n<li>Still, some aren\u2019t convinced the new scheme is sound.<\/li>\n<\/ul>\n<p class=\"puppeteer-article-text-type-element\">First it was a <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/what-microstrategys-1637-employees-actually-do\/\" rel=\"noopener\" target=\"_blank\">software business<\/a>. Then it became a Bitcoin treasury. Now, the firm formerly known as MicroStrategy is coming after the $100 trillion corporate bond market. <\/p>\n<p class=\"puppeteer-article-text-type-element\">On Tuesday, Michael Saylor, the executive chairman of Strategy, pitched his company\u2019s latest financial engineering move: a $1 billion preferred stock offering that, he said, unlocks a whole new level of Bitcoin-fueled growth.<\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cWe\u2019re the largest issuer of Bitcoin-backed credit instruments in the world,\u201d Saylor <a href=\"https:\/\/x.com\/saylor\/status\/1932485145464021158\" rel=\" nofollow\">told<\/a> Bloomberg on Tuesday. \u201cThat means we borrowed money that we never have to pay back, that we have to pay a dividend on.\u201d <\/p>\n<p class=\"puppeteer-article-text-type-element\">After borrowing the money, the company uses it to buy more Bitcoin. <\/p>\n<p class=\"puppeteer-article-text-type-element\">The trick? Strategy can suspend the dividend payment if it needs to, Saylor said. <\/p>\n<p>\u2018Alarming\u2019 trend<\/p>\n<p class=\"puppeteer-article-text-type-element\">Strategy now holds 580,000 Bitcoin worth about $63 billion. The company\u2019s market capitalisation is around $120 billion. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Strategy\u2019s <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/bernstein-explains-microstrategy-bitcoin-stock-strategy\/\" rel=\"noopener\" target=\"_blank\">scheme<\/a> is just one piece of an \u201c<a href=\"https:\/\/www.dlnews.com\/articles\/markets\/alarming-trend-as-gamestop-picks-up-513m-bitcoin\/\" rel=\"noopener\" target=\"_blank\">alarming<\/a>\u201d and much larger wave of corporate Bitcoin adoption that\u2019s swept up companies from Metaplanet in Japan to GameStop in the US. <\/p>\n<blockquote cite=\"Eliezer Ndinga, 21Shares\" class=\"c-stack\">\n<p class=\"\">History shows that claims of perpetual upside often ignore market realities. <\/p>\n<p>\u2014 \u00a0Eliezer Ndinga, 21Shares<\/p><\/blockquote>\n<p class=\"puppeteer-article-text-type-element\">Many are pursuing similar playbooks \u2014 issue debt, sell shares, then plough that money into Bitcoin.<\/p>\n<p class=\"puppeteer-article-text-type-element\">Even Donald Trump\u2019s media conglomerate <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/trump-mimics-michael-saylor-with-bitcoin-buying-plan\/\" rel=\"noopener\" target=\"_blank\">wants a piece of the pie.<\/a> <\/p>\n<p>Saylor\u2019s new scheme<\/p>\n<p class=\"puppeteer-article-text-type-element\">Unlike the billions that Strategy has raised through convertible debt, this new preferred share scheme works differently. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Preferred stock sits somewhere between debt and common equity. Like bonds, preferred shares typically pay a fixed dividend and are often considered less risky than common stock.<\/p>\n<p class=\"puppeteer-article-text-type-element\">Whereas debt comes with a maturity date \u2014 the day when a loan comes due \u2014 preferred stock does not. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Holders of preferred shares usually don\u2019t get voting rights, but they do have priority over common shareholders when it comes to dividends.<\/p>\n<p class=\"puppeteer-article-text-type-element\">Because preferred stock never matures, Strategy doesn\u2019t have to repay the principal, nor does it face the same refinancing or liquidation risk as it would with traditional debt. <\/p>\n<p>$100 trillion<\/p>\n<p class=\"puppeteer-article-text-type-element\">For Saylor, this is more than just a creative financing tool \u2014 it\u2019s a direct shot at the corporate bond market, which he said is worth about $100 trillion. <\/p>\n<p class=\"puppeteer-article-text-type-element\">The bond market offers companies access to capital at scale. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Traditional corporate bonds, however, usually come with fixed maturities and the risk of refinancing. <\/p>\n<p class=\"puppeteer-article-text-type-element\">By contrast, Saylor is pitching his preferred stock as a perpetual financing instrument \u2014 one that never matures, never requires repayment, and can continue funding Bitcoin purchases indefinitely. <\/p>\n<p class=\"puppeteer-article-text-type-element\">And he claims it has no downside. <\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cIf we can issue preferred shares that yield 10% while Bitcoin returns 57% \u2014 we\u2019re capturing the 47% arbitrage,\u201d Saylor said. <\/p>\n<p class=\"puppeteer-article-text-type-element\">It\u2019s \u201ceffectively risk free.\u201d <\/p>\n<p>Revaluing Strategy<\/p>\n<p class=\"puppeteer-article-text-type-element\">Moreover, Saylor wants investors to stop valuing the company solely on its existing Bitcoin holdings. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Instead, traders should price in the firm\u2019s ability to continuously raise capital and generate additional Bitcoin yield.<\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cIf you want to value the company, you have to value its ability to generate Bitcoin yield over and above the Bitcoin holdings the company has,\u201d Saylor said.<\/p>\n<p class=\"puppeteer-article-text-type-element\">So far, investors seem to agree. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Strategy\u2019s market cap now sits around $120 billion \u2014 a 91% premium over the dollar value of its Bitcoin stack that cannot be explained by its <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/microstrategy-pivots-to-bitcoin-with-rebrand-as-sales-slump\/\" target=\"_self\" rel=\"noopener\" title=\"https:\/\/www.dlnews.com\/articles\/markets\/microstrategy-pivots-to-bitcoin-with-rebrand-as-sales-slump\/\">floundering<\/a> software business.<\/p>\n<p>\u2018Complete financial gibberish\u2019<\/p>\n<p class=\"puppeteer-article-text-type-element\">Critics say that a monkey in silk is a monkey no less.<\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cThis is, of course, complete financial gibberish,\u201d legendary short seller Jim Chanos <a href=\"https:\/\/x.com\/RealJimChanos\/status\/1932497480547250574\" rel=\" nofollow\">said<\/a> on X. <\/p>\n<p class=\"puppeteer-article-text-type-element\">Chanos has been <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/jim-chanos-shorts-michael-saylor-strategy-to-buy-bitcoin\/\" rel=\"noopener\" target=\"_blank\">shorting the spread<\/a> between Strategy\u2019s stock price \u2014 which trades at about $384 and <a href=\"https:\/\/finance.yahoo.com\/quote\/MSTR\/\" rel=\" nofollow noopener\" target=\"_blank\">is up 32%<\/a> this year \u2014 and the value of the nearly $63 billion in Bitcoin it holds. He then uses that money to buy more Bitcoin.<\/p>\n<p class=\"puppeteer-article-text-type-element\">At the core of Chanos\u2019 critique is Saylor\u2019s notion of how investors should value Strategy. <\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cMr. Saylor wants you to value his business based not only on the net value of his Bitcoin holdings, but additionally with a multiple on the change in that NAV!\u201d said Chanos. <\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cBecause now he can leverage his balance sheet, lol.\u201d<\/p>\n<p class=\"puppeteer-article-text-type-element\">NAV stands for net-asset value, and represents what a company\u2019s holdings are worth on paper. When there\u2019s a premium \u2014 or mismatch \u2014 it means a company\u2019s stock price gets out of line with the actual value of what it owns.<\/p>\n<p class=\"puppeteer-article-text-type-element\">One example is <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/how-metaplanet-rose-from-hotelier-to-microstrategy-of-japan\/\" rel=\"noopener\" target=\"_blank\">Metaplanet<\/a>, Strategy\u2019s copycat from Japan. Analysts at 10xResearch say that investors are <a href=\"https:\/\/www.dlnews.com\/articles\/snapshot\/shorts-seize-on-metaplanet-as-stock-soars-to-5x-per-bitcoin\/\" rel=\"noopener\" target=\"_blank\">pricing its stock at $596,146<\/a> per Bitcoin, more than five times the cryptocurrency\u2019s market value. <\/p>\n<p>Ignoring risk<\/p>\n<p class=\"puppeteer-article-text-type-element\">Chanos likened the concept to someone whose house increases in value from $450,000 to $500,000 claiming the property should now be worth $1.5 million by applying a 20x multiple to the $50,000 gain.<\/p>\n<p class=\"puppeteer-article-text-type-element\">That kind of logic ignores the inherent risk that comes with using leverage to repeatedly purchase more Bitcoin, said Chanos.<\/p>\n<p class=\"puppeteer-article-text-type-element\">Indeed, <a href=\"https:\/\/www.dlnews.com\/articles\/markets\/this-key-metric-shows-the-risks-of-chasing-michael-saylors-bitcoin-strategy\/\" rel=\"noopener\" target=\"_blank\">risks abound<\/a>. <\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cNo investment is truly risk-free, despite Michael Saylor\u2019s claims about MicroStrategy\u2019s new preferred stock option,\u201d Eliezer Ndinga, VP head of strategy at 21Shares told DL News.<\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cHistory shows that claims of perpetual upside often ignore market realities.\u201d<\/p>\n<p class=\"puppeteer-article-text-type-element\">While Bitcoin\u2019s price has climbed substantially since 2020 when Strategy began its Bitcoin buying scheme, Strategy\u2019s net asset value has fluctuated wildly along the way. <\/p>\n<p>Ballooning premium<\/p>\n<p class=\"puppeteer-article-text-type-element\">Yet the company\u2019s valuation premium has ballooned. <\/p>\n<p class=\"puppeteer-article-text-type-element\">\u201cDespite a few spikes and crashes along the way, Saylor\u2019s \u2018infinite money glitch\u2019 has really not changed the MSTR NAV very much since he began materially buying Bitcoin in 2020,\u201d Chanos said.<\/p>\n<p class=\"puppeteer-article-text-type-element\"><a href=\"https:\/\/x.com\/RealJimChanos\/status\/1932529476317163968\" rel=\" nofollow\">According to<\/a> Chanos, Strategy now trades at about 1.8 times its net asset value. In 2020, however, that figure was <a href=\"https:\/\/strategytracker.com\/mstr?charts=nav-multiplier%2Cperformance-comparison%2Cbitcoin-price%2Cnav-premium%2Creserve-chart&amp;timeRange=all\" rel=\" nofollow noopener\" target=\"_blank\">more than six times<\/a> its value in Bitcoin.<\/p>\n<p class=\"puppeteer-article-text-type-element\">Is Saylor\u2019s grand vision for a Bitcoin-denominated capital market a force to be reckoned with or are the critics rightfully shorting his company\u2019s stock?<\/p>\n<p class=\"puppeteer-article-text-type-element\">One thing is certain \u2014 Wall Street, and its sceptics, are watching closely.<\/p>\n<p class=\"puppeteer-article-text-type-element\"><a href=\"https:\/\/www.dlnews.com\/authors\/Pedro-Solimano\/\" rel=\"noopener\" target=\"_blank\">Pedro Solimano<\/a>is a markets correspondent based in Buenos Aires. Got a tip? Email him at<a href=\"https:\/\/www.dlnews.com\/articles\/markets\/microstrategy-100tn-bond-play-is-gibberish-per-short-seller\/mailto:psolimano@dlnews.com\" rel=\" nofollow noopener\" title=\"https:\/\/www.dlnews.com\/articles\/markets\/microstrategy-100tn-bond-play-is-gibberish-per-short-seller\/mailto:psolimano@dlnews.com\" target=\"_blank\">psolimano@dlnews.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Strategy is now offering preferred stock to buy up Bitcoin. The company holds 580,000 Bitcoin worth about $63&hellip;\n","protected":false},"author":2,"featured_media":176695,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[2257,51,2441,72961,16,15],"class_list":{"0":"post-176694","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bitcoin","9":"tag-business","10":"tag-markets","11":"tag-microstrategy","12":"tag-uk","13":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114666878146370532","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/176694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=176694"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/176694\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/176695"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=176694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=176694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=176694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}