Bloomstran Slams Saylor's Bitcoin Strategy as 'Desperate' and 'Idiotic'
Christopher Bloomstran, a renowned value investor and president of Semper Augustus, has taken a sharp aim at MicroStrategy's Bitcoin strategy, calling it 'desperate' and 'idiotic'. This comes as MicroStrategy, led by Michael Saylor, continues its relentless Bitcoin accumulation, despite a recent mathematical snag.
In a critical post on X (formerly Twitter), Bloomstran argues that MicroStrategy's latest moves have crossed a line, going from 'smart' to 'idiotic'. He highlights a key issue: the company's market cap is now at 82% of the market value of its Bitcoin holdings, a significant change from the earlier strategy.
The Initial Strategy: Selling Overvalued Shares
Initially, MicroStrategy's strategy was to sell overvalued shares to retail investors when its equity market value traded at a large premium to its Bitcoin. This move was seen as financially savvy arbitrage, creating 'free' value for shareholders. Bloomstran acknowledges this as a morally questionable but financially sound decision.
The Current Dilemma: Dilutive Move
However, the situation has shifted. Bloomstran points out that MSTR's market cap is now roughly 82% of the market value of its Bitcoin holdings. Issuing new shares to buy more Bitcoin is now mathematically dilutive, meaning it reduces the value of existing shares. He argues that MicroStrategy is selling a dollar for 82 cents to buy more of an asset it already owns, a move that he deems desperate and idiotic.
Recent Purchase and Average Price
This scathing critique follows MicroStrategy's recent announcement of another massive Bitcoin purchase. The firm acquired 1,229 BTC at around $88,568 per coin, pushing the average purchase price to nearly $75,000. Despite the high price, Bloomstran remains critical, emphasizing the dilutive nature of the strategy.
