Did I do the right thing? I bought shares of MicroStrategy.

[Poker Player]

Some time ago I bought some shares of Microstrategy. The reason was that I had other stocks and mutual funds and I wanted to own shares of some company that was heavily exposed to Bitcoin.

After buying them, I sometimes doubt if I did the right thing. On the one hand there are those who say that to buy MSTR shares, you better buy Bitcoin directly and that's it. But on the other hand, there are those who say that since MSTR is a company that takes on a lot of debt to buy Bitcoin, it can bring higher potential profits.

So far it seems to have gone well for Saylor:

Michael Saylor is gaining both sides with more and more btc accumulation and now the company holds more than 100k bitcoins as AUM but we can't ignore his other profits like this one :

He holds 40k approximately share of MicroStrategy at $728 and his moves are making some hype in the market and his debt financing has raised some issues to which he replied investing in early days of Facebook to be a pioneer in future.

Earlier today it emerged that he has bought more Bitcoin:

MicroStrategy acquired an additional 3,907 BTC at a price of $45,294 per BTC for about $177 million, thus the total volume held by the company as of August 24 reached 108,992 BTC.

<...>

<...>
The important thing is the financing of the purchase: they purchased the Bitcoin with the ATM facility, or the possibility to issue new shares "on the fly" to buy more bitcoins: they raised capital during the third capital issuing new shares at an average price of 753 USD, raising 177.5 USD, and using 177 of those (ah... the juicy fees!) to buy the bitcoins on Coinbase:
<...>
This is the first time they are using this facility.

It looks like he's not going to stop buying every last penny (funny):

BTFD!



https://twitter.com/natealexnft/status/1417177614972854282?s=21

Do you think it was a good idea to buy a few shares? I guess it would be stupid if I had bought only MSTR shares and didn't have any Bitcoin, but having Bitcoin (and I keep buying), I guess it's not such a bad idea.

Anyway, I would like to point out to some of you catastrophists that I have not bought MSTR shares instead of buying Bitcoin. When I did that it was because I used to buy stocks from the stock market and instead of buying P&G, for example, I decided to buy from a company that had exposure to Bitcoin.

It seems that you have not understood it well or I do not know if I have not emphasized it well: I have Bitcoin that I keep in a hardware wallet and I keep buying regularly. I added 0.01 BTC yesterday for example, as I commented on the WO thread. So most of my investment is in Bitcoin directly and I have the private keys.

[1714187622]

1714187622

[1714187622]

1714187622

[1714187622]

1714187622

[zanezane]

If you hold on to it in the long-term, I think that you did the right thing of buying some shares in Microstrategy, I mean you didn't do anything wrong buying a good stock, is it a dividend paying one though because that can affect how worth it buying those shares.

[Poker Player]

If you hold on to it in the long-term, I think that you did the right thing of buying some shares in Microstrategy, I mean you didn't do anything wrong buying a good stock, is it a dividend paying one though because that can affect how worth it buying those shares.

Hi mate, no, it doesn't pay dividends: -"MSTR does not currently pay a dividend"

Source: https://stocknews.com/stock/MSTR/dividends/

This is common in these types of technology companies but the return you can get from capital appreciation is much higher than dividend-paying blue-chips.

[suchmoon]

But on the other hand, there are those who say that since MSTR is a company that takes on a lot of debt to buy Bitcoin, it can bring higher potential profits.

Higher (or at least different types of) risk too. MSTR can go down for any number of reasons not related to Bitcoin or even to their business performance, e.g. an accounting scandal or general market meltdown.

Plus there's what I'd call a "nocoiner's fee" - since MSTR stock can be bought by entities that are unable to buy Bitcoin directly (mutual funds etc), the price likely includes a demand-induced premium. It may or may not work in your favor in the long run. For example if a Bitcoin ETF becomes available, MSTR stock price might lose that premium.

Having said that, it's done well so far. As long as you're comfortable with it - good luck.

[OgNasty]

My advice would be to be careful about your diversification.  If you're holding Bitcoin already, and then your brokerage account is full of shares of MicroStrategy & Coinbase, then you're more or less putting all of your eggs in one basket.  MicroStrategy is basically a leveraged Bitcoin play at this point and for most people who don't have Bitcoin exposure, is probably a good addition to a portfolio.  Just don't forget to be exposed to all other investment types as well.  Bitcoin is cool and might be the best investment still by a long shot, but diversification will make your life much more care free.

[Upgrade00]

Do you think it was a good idea to buy a few shares? I guess it would be stupid if I had bought only MSTR shares and didn't have any Bitcoin, but having Bitcoin (and I keep buying), I guess it's not such a bad idea.

It's not a bad idea. Considering the growth in value, owning shares in Microsoft is a shrewd approach with potential for good ROI.
I'll only advice you look beyond your personal reason for investing, which is to buy a currency heavily exposed to bitcoin. Each investment has its unique qualities and the purpose of the project, that, in my opinion, should be your motivation to acquire it and not the secondary aspect of an investment.

[hello_good_sir]

Unfortunately, I don't think that it's a great idea.

Essentially you are getting the worst of both worlds here. You are now subject to the illiquidity and the regulatory oversight of the fiat economy, whilst still having to cop bitcoin's volatility.

In fact, there is pretty much no way that MSTR is going to trade at NAV because of the investment vehicle structure. Investors would only be able to realise their total investment if the company for whatever reason decides to dump all their coins. Not worth.

[hatshepsut93]

What if MicroStrategy will tomorrow announce that they decided to dump Bitcoin and invest in some shitcoin instead? There's many examples of a change of heart in crypto industry, latest being Tesla, before that there were people like Roger Ver who were once huge Bitcoin proponents but later turned into enemies.

If you want to have something with performance tied to Bitcoin but with more profit/risk, why not just buy leveraged Bitcoin?

[GreatArkansas]

I don't find any good reason for buying MicroStrategy stocks because they got Bitcoin on their Balance Sheet. MicroStrategy stocks are far different from just buying Bitcoin.
You should buy MicroStrategy stocks for other reasons too, not just because they hold Bitcoin too. If I will answer the question of buying MicroStrategy stock instead of Bitcoin, I'll go buying Bitcoin alone because it's where I believe on. And for me, it's risk that they are on debt just to buy more Bitcoin.

[pooya87]

I wouldn't do it if I were you. If the goal is diversification then after you bought bitcoin you should buy things that are not being affected by bitcoin price. It is the same arguments about buying altcoins, why buy something that could crash hard?
Not to mention that there is another scenario that happens to all big companies. If someone hacked MicroStrategy's cold storage and stole 80% of their total coins. The company's stock would tank hard, it may even disappear as they file for bankruptcy.

As for the profit, I seriously doubt that this company's stock can keep up with bitcoin price rise. It may match it now or even be pumped higher at times, but in the long run it won't keep up.

[mk4]

If you think you're underweight in bitcoin and have no other way of purchasing BTC rathen than have exposure through MSTR, then it's probably reasonable. But assuming that you have money in stocks for the sole reason to diversify your portfolio a bit, then probably a bad idea? Unless your plan in the first place was to go really really heavy on bitcoin, which I personally don't recommend, but in the end it's your money.

[stompix]

After buying them, I sometimes doubt if I did the right thing. On the one hand there are those who say that to buy MSTR shares, you better buy Bitcoin directly and that's it. But on the other hand, there are those who say that since MSTR is a company that takes on a lot of debt to buy Bitcoin, it can bring higher potential profits.

To be honest, I don't like this type of diversifying, it's like you go long in oil and invest in Exxon shares, and in this case MSTR carries a lot of risks and I don't see why would they bring higher potential profits from since they're only buying bitcoin, nothing else that's more spectacular or that would outperform your own buys not forgetting the fact that they have their own expenses on top of that. And the risks are far higher, the company can land itself into trouble, from legal stuff to hacks to stupid decisions, a crazy dump triggered by god knows what even like we've seen back in last April would send them near bankruptcy with their exposure, on the other hand, the bitcoins you held yourself will be still yours no matter what.

In my opinion, I would leave buying shares to the ones that can't buy BTC directly, and that's not the case here.

It's not a bad idea. Considering the growth in value, owning shares in Microsoft is a shrewd approach with potential for good ROI.

Yeah, but shares of Microsoft were not tied to the value of a windows license, nor did I see a w95 serial number getting traded for $50k this weekend with the possibility of getting even more valuable in ten years..

[slaman29]

I can't really say if it's good or not, except that if you're buying shares, then you better hope you're legally protected. I know a lot of people buy "shares" on apps these days and it's not even a real share, or a real app, just again numbers on an account that you hope will be honored by people when you want to sell.

I honestly don't see how it's better than BTC:)

[fillippone]

<...>

<...>

<...>

<...>

<...>

<...>

Oh man, I think it's a terrible idea.

Of course, the best is to buy the orange coin itself and hodl your private keys.
The second best is to buy the orange coin and make some professional custodian hodl your keys.
The third best is but some structured product that efficiently tracks the price of bitcoin. Something like GBTC, but better. I don't know exactly where are you from, but something like BTCE (learn more here: ETC Group to launch bitcoin ETP on Deutsche Boerse).
The fourth best is GBTC, now trading at a hefty discount on the secondary market.
The fifth best is buying something vaguely related to BTC; as MSTR.

Where does this chart come from? Adding complexity levels. As @suchmoon suggested. Going down from the simple, direct buy, to the fifth, you are adding layers of unnecessary complexity. All those complexities come at an unnecessary cost, and those costs are positively correlated with risks, in a weird subpar way.
MSTR is not an investment vehicle, you are basically trusting Micheal Saylor (who I reckon has been adamant on his bitcoin choices now, but has done questionable things in the past) about his investment plan. But a lot of things can go wrong for MicroStrategy, the firm, and impact your BTC exposure.

I think I made similar points on my thread in the past:

MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

You should have read more carefully!


Having said that, hope the best for you and your investment!

[Wind_FURY]

<...>

<...>

<...>

<...>

<...>

<...>

Oh man, I think it's a terrible idea.

Of course, the best is to buy the orange coin itself and hodl your private keys.
The second best is to buy the orange coin and make some professional custodian hodl your keys.
The third best is but some structured product that efficiently tracks the price of bitcoin. Something like GBTC, but better. I don't know exactly where are you from, but something like BTCE (learn more here: ETC Group to launch bitcoin ETP on Deutsche Boerse).
The fourth best is GBTC, now trading at a hefty discount on the secondary market.
The fifth best is buying something vaguely related to BTC; as MSTR.

Where does this chart come from? Adding complexity levels. As @suchmoon suggested. Going down from the simple, direct buy, to the fifth, you are adding layers of unnecessary complexity. All those complexities come at an unnecessary cost, and those costs are positively correlated with risks, in a weird subpar way.
MSTR is not an investment vehicle, you are basically trusting Micheal Saylor (who I reckon has been adamant on his bitcoin choices now, but has done questionable things in the past) about his investment plan. But a lot of things can go wrong for MicroStrategy, the firm, and impact your BTC exposure.

I think I made similar points on my thread in the past:

MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

You should have read more carefully!


Having said that, hope the best for you and your investment!

Or this other “next best” Bitcoin-connected investment, buy and HODL some Coinbase stock. COIN? Its volatility is not highly correlated with the volatility of Bitcoin, and you might collect the rewards of the stock’s surge if the whole market/shitcoins surge.

[zanezane]

~

Hi mate, no, it doesn't pay dividends: -"MSTR does not currently pay a dividend"

Source: https://stocknews.com/stock/MSTR/dividends/

This is common in these types of technology companies but the return you can get from capital appreciation is much higher than dividend-paying blue-chips.

Totally agree with your analysis, although I am a fan of blue chip stocks, I can see where you're getting at. My goal is to get a big passive income as much as I can so I am a fan of blue chip.

[el kaka22]

I guess I do not see any difference between them at this point. Microstrategy is a company that keeps on buying bitcoin and that's it, there is nothing else to it and they will profit when the bitcoin price is up and they will lose when the bitcoin price is down, that is literally the only thing they are doing right now.

There is no difference between that and buying bitcoin, because if you bought bitcoin you would lose when it went down and earn when it went up as well. All in all they are not a crook company like most other major places neither and hold so much bitcoin as well hence making a profit for them is not that hard neither. I would say that you did nothing out of ordinary, I can't say it is good, I can't say it is bad, it is just neutral to having bitcoin of your own, and that is why it is not a bad idea for sure, but can't say if it is good neither.

[hello_good_sir]

Of course, the best is to buy the orange coin itself and hodl your private keys.
The second best is to buy the orange coin and make some professional custodian hodl your keys.
The third best is but some structured product that efficiently tracks the price of bitcoin. Something like GBTC, but better. I don't know exactly where are you from, but something like BTCE (learn more here: ETC Group to launch bitcoin ETP on Deutsche Boerse).
The fourth best is GBTC, now trading at a hefty discount on the secondary market.
The fifth best is buying something vaguely related to BTC; as MSTR.

Exactly.

You're essentially buying an illusion. MSTR has no obligations to neither hold the coins or distribute the coins to their shareholders at any stage.

If they don't pay dividends, liquidate their assets and do a stock buyback, how is the stockholder ever going to see the value of their investment go up even in BTC bull markets? It's simply a really bad tracker for BTC price if you're trying to gain exposure to the markets.

[mk4]

Exactly.

You're essentially buying an illusion. MSTR has no obligations to neither hold the coins or distribute the coins to their shareholders at any stage.

If they don't pay dividends, liquidate their assets and do a stock buyback, how is the stockholder ever going to see the value of their investment go up even in BTC bull markets? It's simply a really bad tracker for BTC price if you're trying to gain exposure to the markets.

If bitcoin goes up, the stock should go up simply because of the increase of value of their treasury. Take a look at the BTC/USD vs MSTR/USD chart, both assets are really correlated simply due to the reason I've mentioned.

https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD

But yea, I definitely prefer holding "real" bitcoin for the long-term.

[adaseb]

When it comes to stocks, there really isn't much to buy out there. Everything is overpriced. Except new IPOs like DASH or COINBASE and you still have no idea how much is a fair price to pay. When coinbase launched it opened at $380 and peaked at $420 and it seemed like $400 was a good buy and it would head to $1000 in a few years. However its $250 now and went under $200 almost for a while. Sure its not a crypto coin and its a business that makes profits however it took a big hit when BTC crashed.

Same with DASH it opened at like $200 and went to $100 for a while and now its almost back at $200. Its hard to value these IPOs. And all the other stocks like TSLA, GOOG, AAPL are all overvalued currently. So there is not much to buy. MSTR is not bad as long as they don't sell the coins. And if it goes to a new ATH and they buy more on debt it'll obviously go up higher in terms of %'s rather than buying the coin itself.