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re: Anyone buying MicroStrategy Inc (MSTR)?
Posted on 2/8/25 at 12:48 pm to I Love Bama
Posted on 2/8/25 at 12:48 pm to I Love Bama
(no message)
This post was edited on 3/1/25 at 7:53 pm
1
Posted on 2/8/25 at 1:16 pm to lsuconnman
true 
Posted on 2/8/25 at 3:26 pm to wutangfinancial
quote:It's the most up to date research. A somewhat small effect has closed to close to zero over time. Seems by far the biggest impact is liquidity.
What year was that research written? I’d say there’s a ton of evidence to the contrary and would even argue inclusion to a major index has material impact on a company’s earnings.
I do like your idea of potentially impacting earnings - do you have any literature on that? That could still jibe with the research I cite below, as it says "long term, stocks tend to return to their fundamental value" - and obviously fundamental value could increase if there's a permanent earnings shift due to inclusion.
Naeem, M., & Naseem, M. (2022). “The diminishing stock price effect of S&P 500 index additions in an era of ETFs.” International Review of Financial Analysis, 91, 102263.
Here's a Chat GPTo1PRO summary of the paper:
quote:
Key Points from the Study (Summarized)
Context: Earlier research showed that stocks often experience a notable price spike upon announcement or effective inclusion in a major index (like the S&P 500). However, newer market structures—particularly the rapid growth of ETFs and passive index funds—may have altered how persistent these effects are.
Main Finding:
This paper finds that the immediate “inclusion effect” still exists (i.e., prices jump in the short term), but its magnitude and longevity appear to be smaller than what older studies documented. This suggests that improved market efficiency and extensive arbitrage strategies in today’s markets help mitigate any sustained mispricing.
Possible Reasons for a Diminished Effect:
Greater Passive Ownership: Widespread passive investing could smooth out supply/demand imbalances more quickly.
Active Arbitrage: Traders now anticipate index-fund purchases and compete to exploit any price gap, leaving less room for a prolonged premium.
Liquidity and Information: Markets today disseminate inclusion announcements instantly, so the “surprise” factor is lower; liquidity is also deeper, easing large trades.
Long-Term Returns:
While the stock may maintain a small portion of its inclusion-day gain (due to possible improvements in liquidity, name recognition, or analyst coverage), the bulk of the initial spike tends to erode over the following weeks to months, reverting closer to fundamental value.
As I said before, even in the strong case back in the day, the long-term bump for a stock was like 10-15% (total, not annualized). That has shrunk to close to zero.
But even if we thought it was like 30% for MSTR, that would not argue in favor of holding it. Oh yeah, let me speculate on this radically volatile name because in 5 years, it might be 30% higher than this. That wouldn't be a compelling IRR in the first place.
But long story short, the casual claim that it's some massively obvious bullish thing if a stock is added to an index is muddy at best and likely false.
Posted on 2/8/25 at 4:09 pm to Big Scrub TX
quote:The underlined words are the heart of the difference between MSTR and pretty much every other stock.
Key Points from the Study (Summarized) Context: Earlier research showed that stocks often experience a notable price spike upon announcement or effective inclusion in a major index (like the S&P 500). However, newer market structures—particularly the rapid growth of ETFs and passive index funds—may have altered how persistent these effects are.
Main Finding: This paper finds that the immediate “inclusion effect” still exists (i.e., prices jump in the short term), but its magnitude and longevity appear to be smaller than what older studies documented. This suggests that improved market efficiency and extensive arbitrage strategies in today’s markets help mitigate any sustained mispricing.
Possible Reasons for a Diminished Effect: Greater Passive Ownership: Widespread passive investing could smooth out supply/demand imbalances more quickly. Active Arbitrage: Traders now anticipate index-fund purchases and compete to exploit any price gap, leaving less room for a prolonged premium. Liquidity and Information: Markets today disseminate inclusion announcements instantly, so the “surprise” factor is lower; liquidity is also deeper, easing large trades.
Long-Term Returns: While the stock may maintain a small portion of its inclusion-day gain (due to possible improvements in liquidity, name recognition, or analyst coverage), the bulk of the initial spike tends to erode over the following weeks to months, reverting closer to fundamental value.
MSTR turns small windows of mispricing and asymmetry into permanent capital. It manipulates its stock price constantly to produce permanent capital. They are the market maker and arbitrager. That is the business model. When the market GIVES them that opportunity it’s a fastball over the heart of the plate. They gamed the Nasdaq inclusion for 150k free bitcoins and that doesn’t even consider future passive flows.
This post was edited on 2/8/25 at 4:11 pm
Posted on 2/8/25 at 6:04 pm to beaverfever
quote:I completely agree that as long as people are willing to pay a 2-4X premium for bitcoin in the form of newly-issued ATM shares of MSTR, then it's a perpetual motion machine essentially and one could argue it has infinite value.
MSTR turns small windows of mispricing and asymmetry into permanent capital. It manipulates its stock price constantly to produce permanent capital. They are the market maker and arbitrager. That is the business model. When the market GIVES them that opportunity it’s a fastball over the heart of the plate. They gamed the Nasdaq inclusion for 150k free bitcoins and that doesn’t even consider future passive flows.
It's just that I don't believe the stupidity will be that persistent in the long run.
Posted on 2/8/25 at 6:18 pm to Big Scrub TX
quote:
It's just that I don't believe the stupidity will be that persistent in the long run.
It's impossible for it continue forever eventually it always unwinds. Obvious money can be made before it does. But there will be a lot of bag holders.
Just how soon does it come no one knows, obviously once they run out of people willing to buy the dilution
This post was edited on 2/8/25 at 6:20 pm
Posted on 2/8/25 at 6:28 pm to Big Scrub TX
Very fair take. They’re a company that is taking advantage of what the market is giving them and the market could absolutely stop giving it to them. I just feel like in an age of monetary debasement and financial nihilism, MSTR might be able to keep the masses entertained while they funnel massive amounts of money into bitcoin and take advantage of a market that they artificially accelerated themselves.
This post was edited on 2/8/25 at 6:32 pm
Posted on 2/8/25 at 6:49 pm to UltimaParadox
I don’t see how y’all understand the company as well as you clearly do and don’t conclude that it makes sense to grab some bitcoin. MSTR exists to pump Bitcoin’s price. To hell with the company. Buy the asset they’re desperately pumping.
Posted on 2/8/25 at 6:56 pm to beaverfever
quote:
don’t see how y’all understand the company as well as you clearly do and don’t conclude that it makes sense to grab some bitcoin. MSTR exists to pump Bitcoin’s price
You answered your question when it comes to mstr and Bitcoin.
A security as thinly traded as BTC could be under massive price pressure when the mstr trade unwinds. They would be forced to unload their Bitcoin to pay back all the debt they took on to buy the Bitcoin. Quickly becomes a death spiral.
Posted on 2/8/25 at 7:05 pm to UltimaParadox
Your argument isn’t a poor one at all. it just suggests a higher level of fiat stability than I think exists. It also assumes that bitcoin wont reach a certain escape velocity price when people capitulate into the asset and the zeitgeist changes.
This post was edited on 2/8/25 at 7:09 pm
Posted on 2/8/25 at 9:19 pm to Big Scrub TX
I’ve read that one before or at least a summary of it. Ya, we’re on the same page here. I was more speaking to the time prior to inclusion. There’s a hedge fund strategy to buy equity and calls to force dealers to drive the price up to hedge their books. I don’t believe in arbitrage but it’s some version of it
.
I can find some for you but basically it can drive down cost of equity/debt and gives a company better access for rent seeking.
.
quote:
do like your idea of potentially impacting earnings - do you have any literature on that? That could still jibe with the research I cite below, as it says "long term, stocks tend to return to their fundamental value" - and obviously fundamental value could increase if there's a permanent earnings shift due to inclusion
I can find some for you but basically it can drive down cost of equity/debt and gives a company better access for rent seeking.
This post was edited on 2/8/25 at 9:22 pm
Posted on 2/9/25 at 12:44 am to beaverfever
quote:Without question, Saylor is a genius for advancing this model. I have said before I think people confuse the genius of the grift with it somehow being a good investment to be grist for the grift.
Very fair take. They’re a company that is taking advantage of what the market is giving them and the market could absolutely stop giving it to them. I just feel like in an age of monetary debasement and financial nihilism, MSTR might be able to keep the masses entertained while they funnel massive amounts of money into bitcoin and take advantage of a market that they artificially accelerated themselves.
Posted on 2/9/25 at 9:29 am to Big Scrub TX
quote:
Without question, Saylor is a genius for advancing this model. I have said before I think people confuse the genius of the grift with it somehow being a good investment to be grist for the grift.
Just look at their SEC fillings for insider sales and you can see the conviction in their strategy. They know it's massive dilution and every insider has been selling everything they can in the short term.
In the last year insiders have sold 500 million dollars of stock and bought 0. This isn't normal compensation scheduled to diversify. This is a massive acceleration of insider sales compared to the past almost 4x.
They know the play and are cashing out on the backs of their investors.
Posted on 2/9/25 at 9:59 am to UltimaParadox
Any real bitcoiner wants bitcoin over shares of a company. Saylor evangelizes for bitcoin, not his stock. The stock is just as good of an expression of Bitcoin maximalism as you’re going to find in a publicly traded company.
All of this is a waste of mental bandwidth if you have faith in the fiat system. That’s a personal decision. I feel like the government has robbed me of the wealth I have worked for via inflation (theft). If someone doesn’t view it that way and they still feel like government issued paper works for them, that’s their call.
All of this is a waste of mental bandwidth if you have faith in the fiat system. That’s a personal decision. I feel like the government has robbed me of the wealth I have worked for via inflation (theft). If someone doesn’t view it that way and they still feel like government issued paper works for them, that’s their call.
This post was edited on 2/9/25 at 10:08 am
Posted on 2/9/25 at 10:33 am to UltimaParadox
Also, I do appreciate the fact that your take isn’t based in ignorance. The government printer is what offends me, not the educated people who engage in these conversations that have different perspectives.
Posted on 2/9/25 at 10:51 am to beaverfever
quote:To further the grift.
Saylor evangelizes for bitcoin, not his stock
quote:ETFs exist.
The stock is just as good of an expression of Bitcoin maximalism as you’re going to find in a publicly traded company.
quote:They aren't mutually exclusive. Bitcoin can be worthless too, just like fiat.
All of this is a waste of mental bandwidth if you have faith in the fiat system. That’s a personal decision. I feel like the government has robbed me of the wealth I have worked for via inflation (theft). If someone doesn’t view it that way and they still feel like government issued paper works for them, that’s their call.
Posted on 2/9/25 at 3:32 pm to Big Scrub TX
quote:Exactly. The only thing that we know is that fiat goes to zero. The rest is tbd.
They aren't mutually exclusive. Bitcoin can be worthless too, just like fiat.
Posted on 2/18/25 at 3:16 pm to beaverfever
MSTR announces $2B convertible bond offering. They’ll be scooping up 20k coins in the next week or so.
Posted on 2/18/25 at 8:30 pm to beaverfever
Bring on the vol
Its been too quiet lately
Its been too quiet lately
Posted on 2/18/25 at 9:29 pm to beaverfever
Can they do it all by Friday please. Monthly call I’d like to win out on.
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