Excellent post Viktor! You have clarified many issues that I had in gray areas. These are the kinds of articles that people should read to really understand the market.
On the topic of MSTR : Follow Jeff Punter and Ben Werkman on Twitter, then listen to the MSTR True North episodes on Youtube, and also listen to a few Michael Saylor interviews
1. Markets can be irrational for a very long time. What would to happen, if the Strategy premium were to turn into a discount for a sustained period of time?
2. The convertibles can be redeemed by investors in strategy stock or in cash, right? If the stock (or BTC) price was in the dumpster, and investors wanted the cash instead of the stock, Strategy would have to sell BTC to cover their obligations, triggering a death spiral. Is that a possible scenario or am I getting this wrong?
In your opinion, what are some drawbacks or pitfalls of the mstr strat playbook? Do you think it comes a time where investors are no longer interested at the convertibles as mstr approaches its ideal leverage (since i would argue most of the volatility comes from mstr issuance to purchase more btc)?
Well, I think the main drawback is indeed that the strategy stops working once there is not enough demand for the structured products or the MSTR equity. In that case, the premium should drift closer to 1
Just remember all caps, when you spell the man's name
Excellent post Viktor! You have clarified many issues that I had in gray areas. These are the kinds of articles that people should read to really understand the market.
Keep it up, you bring a lot of value man :)
Hey thank you very much for this comment :)
How do you learn about all these things, whats the source from where I can do my study?
On the topic of MSTR : Follow Jeff Punter and Ben Werkman on Twitter, then listen to the MSTR True North episodes on Youtube, and also listen to a few Michael Saylor interviews
Great Article!
2Qs:
1. Markets can be irrational for a very long time. What would to happen, if the Strategy premium were to turn into a discount for a sustained period of time?
2. The convertibles can be redeemed by investors in strategy stock or in cash, right? If the stock (or BTC) price was in the dumpster, and investors wanted the cash instead of the stock, Strategy would have to sell BTC to cover their obligations, triggering a death spiral. Is that a possible scenario or am I getting this wrong?
In your opinion, what are some drawbacks or pitfalls of the mstr strat playbook? Do you think it comes a time where investors are no longer interested at the convertibles as mstr approaches its ideal leverage (since i would argue most of the volatility comes from mstr issuance to purchase more btc)?
Well, I think the main drawback is indeed that the strategy stops working once there is not enough demand for the structured products or the MSTR equity. In that case, the premium should drift closer to 1