O’s Cap

@comments_here_1 @HormuzLetter Nothing wrong with the post. It’s just become selective reporting. Eg not even reporting the announcement of a deal, just Israel’s dissent and something that might be wrong with it. I have no issue with the guy, just hard to say it’s balanced anymore.

BREAKING: Iran says the US has agreed to pay $300 billion in reconstruction funds directly to Iran as part of the deal Pakistan announced, alongside the release of $24 billion in frozen funds with $12 billion released before negotiations even start, per Mehr News. This directly contradicts Trump's & Vance's claim that no funds will be transferred to Iran at all. If Trump denies this is true, there never was a deal. If Trump confirms, the US has fully capitulated to Iran's demands.

I’m newer to the story. What do you think happens to mNAV if he raises the coupon to 15% but can’t raise more STRC to buy more BTC? The worry is if it goes below 1.2 then he starts selling BTC and the coverage against STRC goes down and you’re in a spiral unless BTC bounces quickly?

Saylor won't go bankrupt. The dividend will continue to be paid. If he has to raise the coupon to 15% to get to par, he will raise to 15%. And in the unlikely scenario he can't, he will either sell BTC or more shares of MSTR. And in the even more unlikely scenario that fails, he will just suspend the dividend and wait. There is no liquidition scenario.

@thedefivillain What would this do to the equity though? He could survive but he couldn’t issue common without diluting BTC per share and he couldn’t issue prefs anymore.

Let's say BTC goes to $30k, and Saylor increases the STRC dividend rate to 14% Then his annual dividend burden would be around $2bn per year, and his BTC stack would be worth $25bn He can deplete his BTC treasury by 8% over one year to pay the divs, if BTC stays flat at $30k

I’ve been trying to think through this. Curious for your thoughts (or anyone’s). Say he raises $2-3bn of equity and puts that in the reserve. That gets rid of the immediate cash flow issue since he’s down to 5-6 months of dividend coverage. But you’re still 40-50% deep against the value of the bitcoin at that point through the STRC so you haven’t improved the loan-to-value ratio. Hard to get back to issuing more STRC to buy more BTC under those circumstances. How does he fix this?

Here's a path for $STRC to return to par: 1. Monday morning, June 8: @saylor announces a large green dot replenishing the USD Reserve from selling $MSTR this week. Credit enhanced. 2. Shareholder approval announced on June 9th going to 2x monthly 3. June 15th ex div qualifies for the 11.5% ($.96/sh) June dividend payable June 30 4. June 16th: STRC July bi-monthly dividend announcement raised to 12.5% from 11.5%. 5. June 30: 1st bi-monthly dividend record date

Isn’t it the inverse? So BTC less debt is the book value of equity, and the market cap is still 1.5x that number (ish)? I would argue that’s actually more bearish because it means this has further to go down vs. if it was already trading at a discount to fair value. The question is just what gets people to take the ratio to 1x — do you have a view? Maybe he issues equity to cover the dividends?

I want to talk about the mNAV that everyone refers to on here for $MSTR The thing I see is people saying something like “mNAV is 1.2 so relax” Let me show you what that number quietly leaves out or hides. I want everyone to follow so I’m going to explain it simply, because it can be confusing. Think of the company as a house made out of Bitcoin. Worth about $54bn right now, call it 843,000 coins. But theres a mortgage on the house. They owe roughly $22bn to people who get paid before the owner or the house (ordinary shareholders). Say $7bn to bondholders and $15bn to the preferred holders, STRC and its cousins. So what do shareholders actually own? House minus the mortgage. About $32bn. Just that part. Now there’s two ways people measure the shares against the Bitcoin (2 ways to measure mNAV) The one everyone uses and makes you feel good takes the whole mortgage, adds it back on top of the shares, divides by the house. Comes out near 1.2. Above one, all fine, all looks good. The simpler one just compares the value of shares against the house. Near 0.84 currently. Here’s the trick. By adding the mortgage back in, the 1.2 cancels out the borrowing. The thing that makes things difficult to see, the debt, which is added back into the sum so you cant see it. Fine for comparing two companies on a quiet day. No use for the way this hurts you. The part nobody wants to talk about is what happens to your Bitcoin per share when they print more shares. In a bull market it works. Sell shares for more than the value of the Bitcoin, buy more coins, everyone’s BTC per share nudges up. In a bull market. Trouble is the shares now trade below the Bitcoin sitting behind them. So printing shares to buy coins today actually drags your Bitcoin per share down. The number they publish themselves. And worse than that, when they print shares not to buy Bitcoin but just to pay bills, thats not clever, it’s just pure dilution. More shares, same coins, thinner slice. Before anyone says I’m making it up: last week of May. They sold about $128m of new shares and bought zero Bitcoin with it. Nothing. Same week they sold 32 coins to help pay the preferred dividend. More shares knocking about, fewer coins in the pot, everyone holding it left with less Bitcoin per share. Thats not a flywheel. The preferred’s pull the same stunt to cover the dividend. Sell more STRC just to pay this months bill and the mortgage gets bigger while the house stays the same size. Its remortgaging the house to pay the mortgage. Debt up, house flat, your slice bleeding. And Bitcoin hasnt even dropped yet. Now let’s see what happens if the house price (Bitcoin) drops. The mortgage doesnt move. $22bn whether Bitcoin’s at 64 grand or 20. Doesnt shrink because the house did. So when the house falls, who takes it on the chin? The owner of the house. First, and all of it. Bitcoin falls 15% and your slice doesnt fall 15, it falls nearer 25. Debt sits still, house sinks, the whole lot lands on the equity. Leverage in reverse. Real numbers. Bitcoin’s about 64k. It only has to fall around 60%, to about 26k, and the owners has nothing left. Gone. Fall to about 8k and even the “safe, senior, stable” preferred has nothing under it. And heres the bit that I want you to notice. What do the two numbers do while thats happening? The comforting 1.2 doesnt fall as the owner gets wiped out. Using today’s figures it actually goes up. 1.25 now, about 1.61 by the time the owners slice hits zero. Looks healthier the worse it gets, cause the fixed amounts are now a bigger chunk of a smaller house. The 0.84 simpler one falls (basic mNAV) on the other hand falls to 0.71, then 0.61. Moves with the damage. So when someone says 1.2, relax, have a think about what that really means. Thats the version of mNAV that moves the wrong way when it all goes south, by design. Want to know what’s actually happening when Bitcoin drops, watch the simple one (basic mNAV)

@MintzerMiguel Hi - any update on how this went?

$HUT Logan County zoning board considering data center construction restrictions wandtv.com/news/videos/lo…

The demand / orders are simply never coming to justify this $50 billion valuation. It’s a fine company and product for a smaller scale use case but they simply will never be a real player for these mega campuses. You need 5GW per year into perpetuity to justify the valuation and the market simply isnt large enough for these things. Worth more like $60. $BE

$BE is a brilliant company once you understand the first principle of it. > Turbine is 3-5 years from order to delivery. > 3 companies own oligopoly on it. $GEV Mitsubishi, and Seimens. And all 3 say f** it, we're not adding a new factory. > $BE refines fuel, truck them to location, removing the need for turbine. Check!

$BE bloom energy is reacting very well to the news of all this CAPEX.

@LongVollllll @WaterworldCapi1 Multiple not that expensive on real numbers. They’re sandbaggers and going to beat 2027 consensus EPS by like 100%.

@WaterworldCapi1 What is the long case from here?

Give me your top 2 shorts and why you like them. Winner of my contest gets mad online props. Go.

$BE — CAT Wartsilla GEV ENRGY Boom FTAI are crowding them out yet company still seen as / valued like monopolist on behind the meter. Valuation absurd for disadvantaged / marginal supplier. The orders are never coming. GEV Delta Doosan all developing competitive products they can bundle.

@chamath What about $EQIX? Middle ground, can still privately connect to the public clouds if you want but maintain sovereignty over your own data. Seems like that’s optimal if you want to be able to run a model on Anthropic but not give them your data. What do you think?

Is on-premise the new cloud? I’m beginning to think yes. It’s the only way for companies to not blow themselves up and have some semblance of capability in an AI world…

@Midnight_Captl Best way to express this? $EQIX? Only so many places to deploy <5MW of high density GPU workloads in tier 1 markets. Private interconnects with hypers or model providers.

@invertedfragil1 @Sleepysolcap @KevinLMak $TWTR had massive downside if it didn’t go through. Maybe not quite $SAVE but 50%+ for sure.

@Sleepysolcap @KevinLMak I meant binary in the sense of a “0” if it doesn’t happen, ATVI nor TWTR were a zero without the deal. Any arb is binary in the sense of happening/not happening for regulatory reasons

I'm not gonna tag the airline merger arb stock, but I find it strange to see fintwit so one sided on this trade yet so confident. The market (and presumably the professional risk arb traders) are pricing it this way for a reason, and nobody seems to be talking about that? I have no informed view. But have a tiny fade against fintwit via short march $25c.

@blainehodder @WagieCapital This is part of why I like deals with big spreads. In addition to the above dynamic, you often have off-ramps (e.g., settlements, divestitures, recuts, etc.) that are mispriced.

@blainehodder @WagieCapital Totally agree with this. I can’t prove this, but having been involved in a bunch of these now it seems like the wider the range of outcomes, often the wider the discount to expected value.

@LionelHutz_Esq Any shot this makes DOJ want to settle? Take incremental divestitures, declare victory, avoid bad case law on this one, take learnings and go after the next one?

*record scratch* Reeeeeemiiiixxxx