Potts

Rebellion to tyrants is obedience to God. ☀️₿ 🇺🇸

[Potts @Potts_01]

@CrisReed Doesn’t really matter if it recovers. It’s not marketed as a rubber band. It’s supposed to be stable.

[Potts @Potts_01]

@TheBTCTherapist Higher.

[Potts @Potts_01]

@comic 🤣

[Potts @Potts_01]

@MAKS_Diogenes Yeah, but…

2btc=2btx

[Potts @Potts_01]

Great write up. Fully agree. MSTR has an active strategy of exposing the common to full sequence of return risk. They are effectively left naked, to get diluted to death if things go south. No proactive mitigating tactics exist to protect the common, aside from the cash reserve which they just wasted on 0% coupon debt due two years out.

I think of dilution as pulling down the total return curve of the future forever. Another way to think of it is how it pulls the inevitable asymptote forward in time.

[Potts @Potts_01]

@mac51246 @comic @thepowerfulHRV Oh he outright enjoys diluting the common. You gotta infer his motivations. I’d say his true goal has been and always has been to obliterate the common shareholder.

[Alex Clark @yoalexrapz]

If you aren’t ready to potentially have a disabled child then you’re not ready for parenthood. Your child could become disabled at any period in their life.

[Potts @Potts_01]

About arithmetic? Just run the math yourself. Ask grok or whatever.

If mNAV declines by X%, how much of an increase in CEBE does one need to be made whole? (Not beat BTC spot mind you, just to remain unchanged.)

Remember the hurdle rate is spot BTC. To beat that, MSTR needs to
1. increase CEBE
2. increase or hold mNAV constant, OR lower mNAV in a way that reduces overall CEBE value less than the gain in new CEBE value.

[Potts @Potts_01]

@BenjaminStongMD @comic Yeah it’s accretive if you hold mNAV constant.

Have they?

[Potts @Potts_01]

If anyone should understand just how pernicious dilution is, it should be Bitcoiners. There is no free lunch. Something’s gotta give. And that something is mNAV.

May 2025 they changed to a dilution-financed arb model with no sequence of returns mitigation for the common.

The data is there.

[Potts @Potts_01]

It’s an equity. You had better care about premium…

MSTR can increase btc per share exposure a lot… but if premium goes down at the same time, you could be underperforming Bitcoin.

If you own mstr you HAVE to care about their mNAV. The combo of btc exposure gains AND equity changes dictates whether you beat or lose to spot btc.

Good luck.

[Potts @Potts_01]

That is outright false. They make implicit trading choices in everything they do.

For example, not establishing a meaningful cash reserves to protect common shareholders from dilution in the event of a bear market. That was a timing decision and a risk decision. And a bad one.

Using cash raised by atm dilution of the common to pay off converts that are 0% coupon, not due for years, and ITM. That was a decision against using the money as its intended hedged or against buying more btc while the price was low.

They can’t NOT make trading decisions. This kids naive statement would be disqualifying in a properly run company.

[Potts @Potts_01]

Everything I have said is a fact you can check yourself. I’m not for or against MSTR, I’m for good strategy and good execution and seeking good investments.

Why do you feel compelled to defend a giant corporation in the first place? It’s just an investment, something we should all be dispassionately analyzing.

MSTR used to have a great business model with the converts as a proxy levered pure-play.

Then they switched to prefs and an arb strategy, and it has big problems as presently executed. All easily fixable too imho and could theoretically be a good business model as well.

Aren’t you, as a self-interested investor, at least curious as to why the equity premium started cratering around May 2025?

[Potts @Potts_01]

Oh euphoria can happen. But from a fundamentals view, their operations are, thus far, literally designed to compress and reduce the steady state of premium.

Swimming against the current, on the expectation that mania will overcome it periodically, is perhaps not the most prudent path.

[Potts @Potts_01]

False. You decided not to have a cash reserve to avoid diluting the common excessively in a bear market. That was a decision you idiot.

You bet that winter wasn’t coming so you raised cash and bought your investment with zero hedge. Quite the bet. The total return curve for the common might never recover.

[Potts @Potts_01]

Even if it does eventually go up 30% a year on average… a couple bad years in a row mean substantial common share dilution. Which devastates the total return curve of the common.

It’s just about “sequence of return” risk. Every retiree knows to save some cash to pay the mortgage so you don’t have to sell your high quality stocks at the worst time. 101 stuff.

Saylor left his common shareholders exposed to full sequence of return risk. Intentionally. Even gleefully.

[Potts @Potts_01]

Equity premium matters. You can increase btc exposure per share, but if premium declines you could still be underperforming spot BTC.

If you’re going to invest in equities, make sure you understand how and why they are valued. Specifically what determines their premium.

Look up MSTR on May 2025. Figure out why it’s mNAV started cratering then, but not before despite btc having peaked and declined since Nov 2024.

[Potts @Potts_01]

@SamplesMIA @ZynxBTC @comic Not about timing. Dilution devastates the return curve for common shareholders.

[Potts @Potts_01]

I’d wager they’d crater mNAV below 1 fast that way. They need some “thing” to generate gains without dilution… prefs are fine if managed properly. Assuming there’s market demand for them (by no means a given).

I wanted them to stick with converts and stay a true leverage proxy pure-play. That was a winning model.