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Senior short seller Jim Chanos slam strategy firm (NASDAQ: MSTR ) on Wednesday touted the stability of its perpetual preferred stock even as its main stock continued to take a beating.
Chanos responded to a Bloomberg interview in which Strategy C.E.O. Fengle Describe the company’s perpetual extension of preferred stock (NASDAQ: STRC ) closed at $100, becoming “the story of the day” and “how it was designed.” Michael ThalerStrategy’s executive chairman agrees.
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However, Chanos, a harsh critic of Strategy’s business model, isn’t convinced.
“Can you imagine any other CEO when the stock price is plummeting and saying, ‘The story today is our junk debt is still trading at par,'” he said.
Can you imagine any other CEO saying, as stock prices plummeted, “The story today is that our junk debt is still trading at par!” $MSTR #lowbar https://t.co/yenqxuAgW9
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Strategy’s financials have really taken a hit because Bitcoin (Cryptocurrency: BTC) continues to be depressed. The company’s Class A shares have fallen more than 16% so far this year and fell more than 60% last year.
Strategy’s market valuation is $41.99 billion, while its Bitcoin holdings are worth $48.17 billion. This means the stock is trading below its net asset value.
However, company executives have consistently defended its business model.
Saylor said earlier this week that the strategy would not sell Bitcoin even if it fell to $8,000, but would instead commit to refinancing debt. He added that the company has 2.5 years of cash to cover dividends and debt without having to raise capital.
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Chanos made headlines for his strategic arbitrage trade of shorting MSTR stock while going long Bitcoin because he believed the stock had an unreasonable premium relative to his BTC holdings.
Chanos believes the premium will be diluted over time as the company continues to issue common stock. In November, his firm exited the hedging trade, noting that the deal was “essentially closed.”
Image source: Who is Danny on Shutterstock.com
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This article Jim Chanos slams Bitcoin strategy for touting preferred stock stability: “Can you imagine any other CEO’s stock plummeting…” Originally published on Benzinga.com
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