Jim Chanos Critiques Michael Saylor’s Valuation Methods
Jim Chanos, one of the leading figures in the world of short selling, has taken aim at Michael Saylor, founder of Strategy, accusing him of espousing “complete financial gibberish” in his valuation methods. Chanos is particularly critical of Saylor’s approach, which attempts to justify the company’s worth based on changes in the net asset value (NAV) of Bitcoin holdings.
“This is, of course, complete financial gibberish. Mr. Saylor wants you to value his business based not only on the net value of his Bitcoin holdings (NAV) at market, but additionally with a multiple on the change in that NAV!”
Investment Strategies and Challenges
In an interesting twist, Chanos suggested a strategy where investors could buy Bitcoin (BTC) as a hedge while shorting Strategy (MSTR), which is known to be the largest corporate holder of Bitcoin.
During a recent segment on Bloomberg, Saylor challenged Chanos’s understanding of Strategy’s business model, asserting that the company is the foremost issuer of Bitcoin-backed credit instruments globally. Saylor emphasized that the acquisition of Bitcoin is funded through preferred stock offerings — specifically, “Stride,” “Strife,” and “Strike” — avoiding any issuance of common stock.
“If the stock trades at a weak premium, we just gonna sell the preferreds.”
Potential Risks of Short Selling
Moreover, Saylor cautioned that Chanos could face significant losses if Strategy’s stock experiences a rally, highlighting the importance of assessing the company’s ability to generate yield from its Bitcoin assets when attempting to value it.
The exchange of views comes on the heels of Strategy’s recent transaction, which involved the purchase of an additional $110 million in Bitcoin, further solidifying its position in the cryptocurrency market.
