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I mean...wat. The company in question seems to essentially have no intention of spending their cash, yet instead of just paying it out in dividends or stock buy

I mean...wat. The company in question seems to essentially have no intention of spending their cash, yet instead of just paying it out in dividends or stock buy backs they're pumping it all into bictoin (or investing in growth). This doesn't make sense for a number of reasons. Firstly: The company has no competitive advantage buying bitcoin. If investors in this company wanted to buy bitcoin there's no reason not to just pay a dividend and let the investors buy bitcoin. Secondly, investors can now no longer invest in MicroStrategy - since the value of your investment in MSTR is now 2/3rd determined by the performance of MSTR, and 1/3rd determined by the performance of bitcoin. Essentially attaching a hugely risky bet on bitcoin to a business analytics company. Thirdly, even if you do buy their contention that USD is going to go to 0 (which is a wild contention) there are other assets you would buy. Commodoties, Foreign currencies, real estate - hell even Treasury Inflation-Protected bonds would all form part of your portfolio. Fourthly, you're signing yourself up for this enormous risk of owning bitcoin. You've essentially put a $400m target on your back saying "If you can compromise our security, you could have half a billion dollars!". Now obviously security is important in all asset ownership, but most assets have far more reputable people willing to offer services to secure your possessions (like a bank). On the other hand though this does make it nice and easy for the CEO to disappear off with half a billion of his investors money in his back pocket. I'm sure glad those investors are in safe hands though - this would be really suspicious if the CEO had previously had to settle accounting fraud charges.

TuringNYC 6y ago
>> MicroStrategy’s revenues have barely grown over the past decade, from $455 million in 2010 to $486 million last year. Totally agree, and this line from the article jumped out at me. So -- during a giant tech boom -- the company was unable to grow revenues...and now it is pivoting to a pseudo-asset management company with a singular bet on BTC? As a shareholder, why would I want this? If I need BTC exposure, I can buy BTC directly, I dont need it co-mingled with a software firm. How does the board allow this to happen?
- nknealk 6y ago
  >> How does the board allow this to happen? This is the real question. I wish we could have a transcript of the discussion between treasury staff and the board on why it was a good idea to tie up cash in this way.
- mrguyorama 6y ago
  The cynical take is that company boards are often close knit and carefully networked old boys clubs full of people willing to screw over shareholders to help out each other, because a CEO in one company is often on the board for another company, which will then have some of the other board members in C level positions. It's a super incestuous club that basically prevents you from losing money
kneel 6y ago
>Firstly: The company has no competitive advantage buying bitcoin. They were able to secure Bitcoin from an OTC desk, at a discount relative to what retail investors pay. You're essentially able to secure the BTC without effecting markets, with this size of purchase it's highly advantageous. MSTR very loudly announced their strategy which was quickly followed by other public companies. (bitcointreasuries.org) Although this type of strategy has been adopted before, the FOMO has really started kick off. This is fundamentally not any different than APPL holding cash, although I'd question the ever decreasing value of USD relative to BTC.

TuringNYC 6y ago

>> MicroStrategy’s revenues have barely grown over the past decade, from $455 million in 2010 to $486 million last year. Totally agree, and this line from the article jumped out at me. So -- during a giant tech boom -- the company was unable to grow revenues...and now it is pivoting to a pseudo-asset management company with a singular bet on BTC? As a shareholder, why would I want this? If I need BTC exposure, I can buy BTC directly, I dont need it co-mingled with a software firm. How does the board allow this to happen?

nknealk 6y ago
>> How does the board allow this to happen? This is the real question. I wish we could have a transcript of the discussion between treasury staff and the board on why it was a good idea to tie up cash in this way.
mrguyorama 6y ago
The cynical take is that company boards are often close knit and carefully networked old boys clubs full of people willing to screw over shareholders to help out each other, because a CEO in one company is often on the board for another company, which will then have some of the other board members in C level positions. It's a super incestuous club that basically prevents you from losing money

kneel 6y ago

>Firstly: The company has no competitive advantage buying bitcoin. They were able to secure Bitcoin from an OTC desk, at a discount relative to what retail investors pay. You're essentially able to secure the BTC without effecting markets, with this size of purchase it's highly advantageous. MSTR very loudly announced their strategy which was quickly followed by other public companies. (bitcointreasuries.org) Although this type of strategy has been adopted before, the FOMO has really started kick off. This is fundamentally not any different than APPL holding cash, although I'd question the ever decreasing value of USD relative to BTC.