Jim Cramer’s Lightning Round: 9 Stocks in Spotlight

5. MicroStrategy Incorporated (NASDAQ:MSTR)

Number of Hedge Fund Holders: 25

Talking about MicroStrategy Incorporated (NASDAQ:MSTR), Cramer remarked:

“I’ve gotta tell you, it’s a Bitcoin play. I prefer to actually own Bitcoin. I know that Citron put some sort of short on it. All I can tell you is own Bitcoin. That’s a winner.”

MicroStrategy (NASDAQ:MSTR) provides AI-powered enterprise analytics software and services. It is also known for its involvement in Bitcoin development. Recently, it faced a setback in its stock performance after Citron Research announced its decision to bet against the company. According to a post made by Citron on X, the company has transitioned into a Bitcoin investment fund, and its business operations are no longer closely tied to its software offerings.

The post criticized the company’s increasing focus on Bitcoin investment, stating that the company’s market volume had become detached from Bitcoin’s underlying fundamentals. While Citron Research expressed continued confidence in Bitcoin’s future, the firm revealed that it had hedged its position with a short position on the stock.

On November 22, appearing on CNBC’s ‘Squawk Box’, Michael Saylor, CEO of MicroStrategy (NASDAQ:MSTR), described the company’s approach to generating revenue by focusing on its role as a Bitcoin Treasury company. He explained that the company earns money by selling the volatility of Bitcoin and reinvesting the proceeds back into the cryptocurrency.

He said that in addition, the company strips the volatility, risk, and performance from fixed-income securities, transferring those factors to common stocks. Saylor noted that critics who short the stock believe that if the premium on the equity disappears, the company won’t be able to make money.

However, he argued that they overlook the strategy where, when borrowing money at 6% and investing it in Bitcoin, the company stands to gain significantly. For example, if Bitcoin appreciates by 30% or even 60%, MicroStrategy could realize a 90% spread on Bitcoin, compared to an 80% spread.