The thing I am having trouble understanding about MSTR is, where is the sweet spot on the NAV premium. The part that escapes me is the regression analysis on the NAV leverage. I guess I don't understand why or how there could be a continuously increasing multiple on the NAV. What is the rationale as to why the multiple on NAV should continue to increase?
I don't know what you mean by "continuously increasing multiple on the NAV (for mstr)" when it has gone down from over 3mNAV to about 2mNAV currently? mstr mnav level is one of those voodoo metrics that doesn't mean as much as people make it out to be The most important is current bitcoin market conditions and price For example, Nov 2024 was the highest mstr mnav, ath mstr share price, top of the world, bitcoin and meme coins were going crazy on the upside mstr mnav high, mstr share price strong uptrend today, bitcoin below $100k, meme coins and altcoins in the dumps, and mstr mnav is recent low level, mstr share price, low levels If what you're saying is correct, you would be putting a significant amount of your funds to buy mstr today, and you are probably not a buyer today, I would guess, this is not an attack, neither am I adding to my mstr positions Let me give you an extreme example, mstr NAV was less than 1x during the bitcoin bear market of 2022, did you invest significantly into mstr shares or options? would have been the perfect time as mstr is up over 3000% since those very low mstr share price Again not an attack, I had mstr LEAPS back then but wish I added like 10x my position but I did not mstr share price was low and dead, just as bitcoin was dead, chopping sideways during the 2022 bear market Do not worry so much about mstr mNAV, worry about the most important which is bitcoin market condition and price, the mNAV will be whatever it is, based on bitcoin price action my 2 satoshis
There is not. It was 3 times running into the elections, but now it is back at 2. https://www.mstr-tracker.com/discuss/premium And this is crypto, so it is futile to find logic in the price movement. I don't think they expect the NAV premium to grow, it is just whatever it is. Once the European pensions can directly invest in crypto, the NAV should go back to 1.
That helped and I think I get the premise of it. The NAV multiple is obviously a supply / demand issue. It got a little relief on 1/24 when the company swapped a billion of paper with stock. what it’s measuring essentially is the enthusiasm or lack there of in bitcoin using MSTR as a proxy. a regression analysis on human psychology may have some merit.
mstr as a leveraged proxy for bitcoin, hence the title of this thread Leveraged instrument for bitcoin is a curse and a blessing, it is up to us traders or investors how to use the magic for our good or for our detriment During the bear market, my mstr LEAPS was down over 90% for a long time from $27k risk capital investment to less than $2500 m2m values at the lows for months in 2023 but from such low price levels, the price shot up 5000% within a couple of months, over $120k I could have simply doubled my position risk capital at the low and sold at the high for over $1M profits, coulda woulda shoulda [I did make money on the next mstr options play, as an aside] human psychology as you said, fears during the bear market when things seem hopeless, greed when there is a bubble/fomo and things are about to have a regression however short term, or long term the time period may transpire https://www.elitetrader.com/et/threads/crypto-macro-trends-for-2022.363931/page-81#post-5865205 https://www.elitetrader.com/et/threads/crypto-macro-trends-for-2022.363931/page-88#post-5909685
well what's interesting about the regression is that it gives you a bit of a range now of enthusiasm and pessimism - if not, maybe, the only metric following such a thing available. i used to think it was bro-stats but it may be immensely valuable in determining where to enter not just on the basis of price but also as valuation of leverage as you say... so if you tried to visualize the 1 & 2 sigma moves on each side you would say that it's probably right on the edge of a 1 sigma bearish (modestly bearish) edge and if it sells off a bit, stock could get clocked a little further, (which if the yen is any guide, totally possible)...i'm going to wait a touch and also see if i can download this data
MSTR's mNAV should be > 1 as long as MSTR can issue convertible debt at 0% with a conversion price set at an mNAV > 1 (the most recent issuance conversion price is approximately mNAV=2.5 given the 35% conversion premium). In these instances, convertible debt issuance increases the stock's bitcoin/share, which pushes the mNAV away from 1.
When I said there is not, I was referring to the "continuous increase expectation". There is no such an expectation since the NAV is already at 2 thus bigger than 1.
You said it would drop to 1 if Europe pensions could directly invest in crypto. It shouldn’t drop to 1 if MSTR can continue issuing the convertible debt at similar terms.
I think the NAV premium has to do with investment money not being able to directly invest in crypto, thus MSTR. Let's say tomorrow there is a new crypto ETF that even European pensions can buy? Why would they pay a premium for MSTR, when they can buy BTC 1 on 1?? I don't see what bonds have to do with it. I assume those sweet bond deals would disappear.