Short Seller Jim Chanos Reiterates Michael Saylor's Strategy Premium Is Unsustainable — Warns Bitcoin Arbitrage Is 'Not A Static Trade' - Strategy (NASDAQ:MSTR)

Veteran short seller James Chanos defended on Sunday his strategic arbitrage trade of shorting Strategy Inc.'s MSTR stock while going long on Bitcoin BTC/USD, as he continues to attack what he thinks is an unjustified premium on the stock relative to its BTC holdings.

What happened: Chanos took to X to highlight the dynamic nature of the strategy, i.e., the one that involves adjusting the portfolio allocation based on market conditions and performance.

"You do realize that the mNAV arb trade is not a static trade, right?" he said, in response to a remark by an X user, Arbitrageur. "If BTC/share increases over time, you have to buy more Bitcoin per share of MSTR to be properly hedged."

The user had found fault with Chanos' position, stating that while the premium may collapse to the net value of Strategy's Bitcoin holdings, the BTC per share will be far larger than it is now.

For the curious, BTC per share is how much more Bitcoin an investor indirectly owns for each share of MSTR. Bitcoin yield is the metric that measures the percentage change in the BTC per share. According to the MSTR tracker, the year-to-date Bitcoin yield was 17.1% as of this writing.

Why It Matters: Chanos and Strategy co-founder Michael Saylor have been attacking each other's trading strategies.

In a recent interview, Saylor said that Chanos doesn't understand Strategy's business model, adding that, unlike trusts, Strategy can employ corporate maneuvers, such as selling preferred stock, to neutralize strategies recommended by Chanos.

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Chanos deemed these remarks “complete financial gibberish.” He said that Saylor's approach is built on the false premise that the market would continue to value MSTR at a premium to its net asset value, thereby betting that the bubble will burst someday.

Strategy has been the market leader in Bitcoin's corporate adoption, building its reserve with proceeds from common stock, preferred stock, and convertible bond issuances. The firm held a stash worth $62 billion as of this writing, according to bitcointreasuries.net.

Price Action: At the time of writing, BTC was exchanging hands at $106,696.56, down 1.18% in the last 24 hours, according to data from Benzinga Pro.

Shares of Strategy closed 0.82% higher at $382.87 during Friday’s regular trading session. Year-to-date, the stock has climbed over 32%.

MSTR demonstrated a very high momentum score—a measure of the stock's relative strength based on its price movement patterns and volatility over multiple timeframes—as of this writing. Find out where the stock ranks among the top 20 stocks with the most momentum by clicking on Benzinga Edge Stock Rankings.