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Ok, I've seen people talk about Saylor benefitting from loan terms that aren't available to normal people. Wouldn't that explain some premium? He can make the leverage play more efficiently than we can.
If I had a magic box that you could invest in, and this magic box could increase the bitcoin-per-share regularly....why would the NAV of my magic box be 1:1?
Investors will invest with the expectation of what bitcoin-per-share will be over some future time horizon.
Not saying NAV should be 2:1 forever, but its basically investors front-running the expectation. Not much different than a >1 PE ratio conceptually....
Right, and, obviously, a belief that the asset of the bitcoin will more than offset the liability of the loan.
Yes, and Saylors magic box doesn't just increase debt. Its a sea-saw. When NAV is >2 he issues shares.....when NAV is <2 he issues debt.
Last I checked his debt load was only about ~25% of his NAV, plus his debt is zero coupon and expires in 3-5 years. So in theory Bitcoin price could fall to $25K and stay there for the next 3-5 years before he had a problem.
My understanding, too. It's remarkably safe... ish, since the preferred stocks don't work like that. Though, those he can decide against paying at any time
Ok, now explain how you could do this regularly/indefinitely
He can, yes — more efficient than us plebs. Not more efficient than hedge funds or other wall street players
why would their borrowing terms change? Also, per MM theorem, it shouldn't matter if they dilute shareholders or issue debt; same company, same thing, regardless of capital structure