7. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 44
MicroStrategy Incorporated (NASDAQ:MSTR), doing business as Strategy, offers AI-powered enterprise analytics software and services. The Q4 2024 marked its largest ever increase in quarterly bitcoin holdings, resulting in the acquisition of 218,887 bitcoins for $20.5 billion, since Q3 end. Looking ahead, MicroStrategy Incorporated (NASDAQ:MSTR) is optimistic about enhancing shareholder value via strategic initiatives in Bitcoin and AI technologies. The company remains well-placed to continue its growth and transformation efforts, thanks to the strong investor backing and an emphasis on transparency and value creation.
There has been optimism around MicroStrategy Incorporated (NASDAQ:MSTR)’s future prospects, thanks to several potential growth drivers. The expected increase in institutional adoption of Bitcoin can support the company, as it places itself as a critical vehicle for Bitcoin exposure in the public markets. MicroStrategy Incorporated (NASDAQ:MSTR)’s software business can also act as a long-term growth driver. The pivot to cloud-based offerings can offer opportunities for future growth in this segment. Talking about its software business, in Q4 2024, its subscription services revenues sat at $31.9 million, demonstrating a 48.4% growth YoY.
Greenlight Capital, an investment management firm, published the Q4 2024 investor letter. Here is what the fund said:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
