MicroStrategy (MSTR) appears to be in the early stages of a rebound that has historically lasted one to three months, presenting a leveraged opportunity on Bitcoin. For a valuation-based trade, consider Marathon Digital (MARA), as its valuation premium tends to bounce quickly when it approaches the 1.0 level. Income-focused investors may find Stride attractive for its high 12.6% yield. Alternatively, Strike offers a unique way to gain exposure to MSTR's upside through its embedded call option feature. Overall, these Bitcoin proxy stocks are currently outperforming Bitcoin, signaling renewed market confidence.

MicroStrategy (MSTR)

• The speaker is very bullish on MSTR, highlighting a recent "bounce back" in the stock price.
• On the day of the recording, MSTR stock was up 2.3%, while Bitcoin was only up 0.35%. This represents a daily performance 7 times that of Bitcoin, which is considered an unusually strong outperformance.
• The rebound is attributed to the market pricing in the return of the company's ATM (At-The-Market) offering, which allows it to raise capital to buy more Bitcoin. The speaker notes the stock bottomed when CEO Michael Saylor announced a pause in the ATM and has been recovering for about a week since.
• The mNAV (market-value-to-net-asset-value), a key valuation metric for the company, is seen as bouncing off a 1.5 premium level and heading higher.
  • Historically, these mNAV rebounds have lasted from one to three months.
• The speaker emphasizes the company's long-term performance, citing a 93% average annual return since adopting its Bitcoin strategy in August 2020. This equates to a 27x to 28x total return over that period.

Takeaways

• The speaker believes MSTR may be in the early stages of a significant rebound, driven by a rising valuation premium (mNAV) and the market's positive reaction to its strategy of acquiring more Bitcoin.
• Investors who are bullish on Bitcoin might view MSTR as a leveraged way to gain exposure. The stock's recent outperformance against Bitcoin could be a signal of renewed market confidence in its strategy.
• The focus should be on the long-term performance. Short-term price swings are noted, but the speaker's core thesis is built on the multi-year track record since the company's pivot to a Bitcoin-centric strategy.

Bitcoin (BTC)

• Bitcoin is the underlying asset that drives the value of MSTR and other proxy stocks discussed.
• On the day of the recording, Bitcoin had a modest recovery, rising 0.35%.
• The discussion uses the iShares Bitcoin Trust (IBIT) as a direct tracker for Bitcoin's daily performance.

Takeaways

• The primary insight is how Bitcoin's price movements influence related stocks.
• While Bitcoin's move was small, it triggered a much larger percentage move in proxy stocks like MSTR, RIOT, and MARA, illustrating their nature as leveraged plays on the cryptocurrency.
• An investor's outlook on Bitcoin is fundamental to making a decision on any of the proxy stocks mentioned.

Bitcoin Proxies (Miners)

• The speaker notes that other Bitcoin-related stocks (proxies) are also bouncing back alongside MSTR.

• Riot Platforms (RIOT):

  • Was up 3% on the day of recording.
  • Mentioned as another proxy that is participating in the rebound.

• Marathon Digital Holdings (MARA):

  • Was up 2.8% - 2.9% on the day of recording.
  • The speaker finds MARA particularly interesting because its mNAV (valuation premium) rarely drops below 1.0.
  • When its mNAV does dip below 1.0, it tends to bounce back quickly. The speaker speculates it could be heading back towards a 1.1 mNAV.

• MetaPlanet:

  • A Bitcoin proxy trading on the Japanese market.
  • It had a down day, but this is attributed to different market dynamics and trading hours, suggesting it's not indicative of the trend in US-traded proxies.

Takeaways

• Investors looking for Bitcoin exposure through equities have several options beyond MSTR.
• RIOT and MARA are showing similar positive momentum, suggesting a sector-wide rebound.
• For investors interested in valuation metrics, the speaker's observation about MARA's mNAV consistently bouncing from the 1.0 level could be a potential signal for entry points during periods of relative undervaluation.

Other MSTR-Related Equities

• The discussion touches on other equities related to MicroStrategy, including its preferred stocks.

• Stride:

  • Highlighted as a high-yield equity, offering a 12.6% yield.
  • The speaker compares this yield to what a bank earns on a risky personal loan.
  • The speaker is personally not interested as they are not a yield-focused investor.

• Strike:

  • The speaker identifies this as the only preferred stock they find personally interesting.
  • The appeal comes from its embedded call option on MSTR common stock, offering a different way to bet on the company's upside.

• MicroStrategy Preferreds (General):

  • The speaker notes the "prefs" are also bouncing back and outperforming Bitcoin.
  • It is suggested that investors should monitor the price to par of these securities, with the expectation that it will increase over time.

Takeaways

• For income-oriented or "yield hungry" investors, Stride offers an exceptionally high yield of 12.6%.
• For investors who want exposure to MSTR's potential upside but with a different risk profile than the common stock, Strike is presented as an interesting alternative due to its call option feature.