Kerrisdale Capital is short Microstrategy (MSTR), long bitcoin


March 28, 2024 9:50 AM EDT

Kerrisdale Capital said Thursday that it is short shares of Microstrategy, Inc. (NASDAQ: MSTR), despite also being long Bitcoin.

The firm has revealed that it is long on bitcoin and short on shares of MicroStrategy, citing the unjustifiable premium at which the company’s shares are trading in comparison to the digital asset that underpins its value.

The note from Kerrisdale Capital highlights the significant rise in MicroStrategy’s stock price following the recent uptrend in Bitcoin’s value.

However, the firm argues that the premium at which MicroStrategy’s shares are trading, representing over two and a half times the spot price of Bitcoin, is unwarranted. The note emphasizes that while MicroStrategy was once considered a unique gateway to Bitcoin investment, the evolving landscape of cryptocurrency accessibility through brokerages, crypto exchanges, and low-fee investment products has diminished its relative attractiveness.

Kerrisdale Capital’s position is underpinned by the belief that the inflated premium on MicroStrategy’s shares is likely to contract, presenting a “compelling opportunity” for a pair trade.

Kerrisdale Capital’s thesis revolves around the distortion of the relationship between Bitcoin and MicroStrategy. The firm projects a potential 50% return if the premium to net asset value reverts to historically consistent averages.


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