Saylor defends Strategy’s operating model against Chanos’s trust comparison

Strategy Executive Chairman Michael Saylor has fired back at famed short-seller Jim Chanos, rejecting his call to short shares of the Bitcoin-heavy tech firm and buy the cryptocurrency instead. 

In a Bloomberg TV interview on Tuesday, Saylor argued that Chanos fundamentally misunderstands Strategy’s business model, calling the arbitrage thesis “misguided.”

Chanos, known for shorting companies he deems overvalued, recently suggested investors should bet against bet against Srategy due to its substantial premium over the firm’s Bitcoin-adjusted book value. That premium, which exceeded 200% at one point in 2024, has been a focal point for skeptics who view Strategy as a glorified Bitcoin holding company.

But Saylor pushed back. “I don’t think he understands what our business model is,” he said. “We’re actually the largest issuer of Bitcoin-backed credit instruments in the world.”

Saylor defends Strategy’s operating model against Chanos’s trust comparison

Saylor emphasized that unlike Bitcoin trusts or closed-end funds, Strategy retains the flexibility to actively manage capital by issuing new financial instruments and leveraging its balance sheet.

“Trusts can’t leverage Bitcoin. They can’t issue preferred shares, they can’t issue permanent shares at a premium. We can,” Saylor asserted. “What [Chanos] still doesn’t understand is that we are not a holding company or a closed-end trust — we are an operating company.”

Strategy, formerly known as MicroStrategy, has recently pivoted its capital-raising strategy. Rather than issuing convertible bonds or diluting shareholders through common stock sales, the firm has embraced preferred stock instruments to finance its aggressive Bitcoin acquisitions. 

This includes the newly launched STRK (Strike), STRF (Strife), and STRD (Perpetual Stride) preferred shares — a trio of high-yield offerings that collectively raised nearly $1 billion last week.

Saylor accuses Chanos of misjudging business model 

Chanos has not responded to Saylor’s latest remarks. But Saylor was unsparing in his critique of the hedge fund manager’s valuation approach.

Saylor said Chanos is valuing the business, generating $8.4 billion of shareholder value at zero, and he is hoping the equity will somehow trade to NAV. 

He continued to say that Chanos is not paying attention to if Strategy can issue preferred shares that yield 10% and invest that in Bitcoin, which has been going up by 57% for the past four and a half years. Saylor noted that the company is capturing the 47% arbitrage, effectively risk-free for their common stock shareholders.

As of Tuesday, Strategy held approximately 582,000 Bitcoin — valued at about $63 billion — making it the largest corporate holder of the asset globally. The company has made over 70 Bitcoin purchase announcements since mid-2020 when Saylor initiated the strategy of using corporate funds to buy the digital currency.

Saylor plans stock buybacks to squeeze shorts if premium narrows

Saylor also hinted at future financial maneuvers to counter short-seller strategies. Should the premium on Strategy’s stock narrow too much, the firm could issue more preferred shares and use the proceeds to repurchase common shares, further tightening supply and squeezing shorts.

“If the stock trades at a weak premium, we’re just going to sell the preferred,” he said. “And if the stock rallies up, he’s going to get liquidated and wiped out.”

While the war of words between Chanos and Saylor may intensify, it reflects a broader debate over how to value a Bitcoin-centric operating company in a market still grappling with crypto’s integration into traditional finance.

For now, Saylor remains unapologetically bullish — on Bitcoin and Strategy’s ability to outperform critics.

KEY Difference Wire: the secret tool crypto projects use to get guaranteed media coverage