Legendary Short Seller Jim Chanos Just Closed His MSTR Trade—And Here's Why That Matters

Veteran short seller Jim Chanos disclosed on Nov. 8 that his firm exited its hedged trade on Strategy (NASDAQ:MSTR), unwinding a position that had been closely watched by cryptocurrency and equity market participants.

The disclosure came via X after what Chanos described as "some inquiries" about the status of the trade. Chanos & Co closed out their position on Nov. 6, ending a strategic bet that centered on the relationship between Strategy's stock price and its substantial Bitcoin holdings.

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The Trade That Caught Wall Street’s Attention

Chanos's approach to Strategy was nuanced — not a simple short position, but a hedged trade. According to research notes circulated by Chanos & Co. earlier this year, the firm had been shorting Strategy shares while simultaneously holding a long position in Bitcoin, aiming to capitalize on what it viewed as an inflated premium between the company's market value and its cryptocurrency assets.

At the time the trade was first recommended in December, Strategy’s market-to-net-asset-value ratio stood at approximately 2.50x. That premium has since compressed significantly. As of Nov. 21 closing prices, MSTR is trading around $170, down roughly 63% from its 2025 peak, with the mNAV ratio now at 1.22x.

Why The Trade Made Sense—And Why It’s Over

The thesis behind the position was straightforward: Strategy’s shares were trading at a substantial premium to the value of its Bitcoin holdings and operational business. Chanos & Co believed this gap would narrow over time as the company continued to issue common equity, diluting the premium that investors had been willing to pay for exposure to Bitcoin through a publicly traded vehicle.

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Chanos & Co noted in their recommendation that while they still believed there was room for further mNAV compression, the trade had “largely played out.” The implied premium—calculated as Strategy’s enterprise value minus its Bitcoin holding value—had fallen from a peak of $80 billion in November 2024 and a more recent peak of $70 billion in July to approximately $15 billion.

"While we still believe there is more room for mNAV compression, the thesis has largely played out." That's how Chanos & Co framed its updated view on Strategy, arguing that the stock's once-outsized premium should keep narrowing as the company continues issuing common equity.

What This Signals For Strategy Investors

The exit by one of Wall Street’s most prominent skeptics doesn’t necessarily mean smooth sailing ahead for Strategy shareholders. The company’s unique business model—essentially functioning as a leveraged Bitcoin investment vehicle wrapped in a business intelligence software company—continues to polarize investors.

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Chanos’s firm had recommended covering the trade with mNAV below 1.25x, having initially suggested the position when the ratio exceeded 2.0x as recently as July. That threshold has now been crossed, making the risk-reward profile less attractive from their perspective.

For retail investors who have ridden Strategy as a Bitcoin proxy, the question becomes whether the remaining premium will continue to erode. The company’s strategy of repeatedly accessing capital markets to purchase additional Bitcoin means ongoing dilution for existing shareholders, even as the underlying asset base grows.

The challenge going forward: as Strategy’s valuation approaches parity with its net asset value, the rationale for paying any premium at all becomes harder to justify—unless investors believe the company’s operational business or its ability to access leverage provides unique value that direct Bitcoin ownership cannot match.

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