Navigating MicroStrategy stock and Bitcoin investments in Episode 1 of True North. Experts discuss strategies, risks, and future trends for beginners.
Timestamp Overview
[00:00:00 - 00:07:00] Going Live and Introductions
- Jeff Walton starts the live stream on Twitter and checks if everyone can see it.
- Tim Kotzman shares a disclaimer that the content is for education only, not financial advice.
- Jeff Walton explains the purpose of True North as a guide for new investors in MicroStrategy and Bitcoin.
- The group notes the rapid growth in interest similar to past market frenzies like GameStop.
[00:07:00 - 00:14:00] Group Introductions and Backgrounds
- Dan Hillery introduces himself as an electrical engineering student excited to learn about options trades.
- Adrian Morris shares his IT and AI background and predicts big gains from MicroStrategy.
- Grain of Salt discusses his economics and tech experience, emphasizing True North as a reliable source.
- Soleil explains his options selling strategy learned after Navy service to fund long positions in MicroStrategy.
[00:14:00 - 00:21:00] More Introductions and Ryan’s Arrival
- Ben Werkman talks about his algorithmic trading and obsession with MicroStrategy research.
- Tim Kotzman describes his private equity work and goal to educate on Bitcoin’s importance.
- Dylan LeClair shares his views on MicroStrategy’s growth and institutional acceptance of Bitcoin.
- Ryan arrives late and expresses excitement about working with the group, focusing on fun and long-term gains.
[00:21:00 - 00:28:00] Bitcoin First Conference Recap
- Dan Hillery recounts excitement at the Bitcoin First conference for MicroStrategy discussions.
- Jeff Walton highlights impressive investors at the event and the split interest between Bitcoin and MicroStrategy.
- Grain of Salt praises the interactive format and humbling encounters with successful attendees.
- Ryan compares the conference to top professional events, noting deep conversations with diverse experts.
[00:28:00 - 00:35:00] Importance of Understanding Bitcoin
- Jeff Walton stresses that knowing Bitcoin basics is key to grasping MicroStrategy investments.
- Adrian Morris discusses Michael Saylor’s video on Bitcoin custody, explaining it suits large institutions.
- Soleil adds that Saylor speaks to big players, not individuals, shattering some collapse fantasies.
- The group agrees self-custody works for individuals but not for companies due to risks.
[00:35:00 - 00:42:00] Debating Bitcoin Seizure Risks
- Adrian Morris argues against easy government seizure of Bitcoin like in 1933 gold confiscation.
- Ben Werkman suggests any seizure would involve deals with banks rather than direct action.
- Dylan LeClair notes institutional custody is necessary for public companies like MicroStrategy.
- Jeff Walton emphasizes Bitcoin’s traceability makes it great collateral for future financial products.
[00:42:00 - 00:49:00] Saylor’s Strategy and Market Narratives
- Ben Werkman explains Saylor markets to big capital needing secure custody options.
- Jeff Walton introduces the idea of Bitcoin as programmable money for corporate use.
- Grain of Salt shares a conversation on valuing businesses by future cash flow multiples.
- The group discusses how narratives drive prices beyond simple net asset values.
[00:49:00 - 00:56:00] Valuing MicroStrategy Beyond MNAV
- Jeff Walton warns against trading solely on MicroStrategy’s net asset value due to passive buyers.
- Adrian Morris calls net asset value just one tool, not a strict rule for valuation.
- Dan Hillery points out accounting rules make current multiples misleading.
- Ben Werkman views MicroStrategy as a startup building new financial products with Bitcoin.
[00:56:00 - 01:03:00] Bitcoin for Corporations Conference
- Ben Werkman describes Saylor’s event teaching companies to adopt Bitcoin strategies.
- Adrian Morris notes Saylor adapts his message for institutional audiences.
- Jeff Walton predicts many more companies will add Bitcoin to balance sheets for diversification.
- Ben Werkman highlights Saylor’s unique incentive to invite competitors to boost his lead.
[01:03:00 - 01:10:00] Future of Corporate Bitcoin Adoption
- Dylan LeClair sees Bitcoin yield as a new finance metric for shareholder value.
- Jeff Walton criticizes Apple’s stock buyback over buying Bitcoin as a missed opportunity.
- Soleil introduces forestry management analogy for timing investments in growing companies.
- The group explores how smaller companies might grow faster in Bitcoin holdings.
[01:10:00 - 01:17:00] Reflexivity and Market Dynamics
- Dylan LeClair predicts late bull market entries by big companies accelerating adoption.
- Adrian Morris questions how major firms enter Bitcoin without sparking huge price surges.
- Grain of Salt suggests buying Bitcoin quietly over time to avoid market reactions.
- Jeff Walton lists upcoming catalysts like elections and index inclusions driving growth.
[01:17:00 - 01:24:00] Corporate Strategies and Opportunities
- Ben Werkman explains smaller companies might use debt first to buy Bitcoin and delay dilution.
- Ryan emphasizes if MicroStrategy leads in Bitcoin holdings, high multiples are justified.
- Jeff Walton warns of rapid repricing events making current valuations seem low.
- The group anticipates vertical price moves from overlapping market events.
[01:24:00 - 01:31:00] Options and Exercise Strategies
- Soleil considers buying January options post-earnings to avoid volatility risks.
- Jeff Walton details the historic January 2025 options expiration with deep in-the-money positions.
- Ryan highlights Soleil’s shift from selling to caution due to strong catalysts.
- Soleil notes reduced short positions after recognizing MicroStrategy’s unique potential.
[01:31:00 - 01:38:00] Potential Squeezes and Hedges
- Jeff Walton speculates Wall Street may be underhedged for massive option exercises.
- Soleil differentiates his strategy for out-of-money options from deep in-the-money ones.
- Ben Werkman expresses fear of selling covered calls given upside potential.
- The group discusses differences between short squeezes and gamma squeezes in MicroStrategy.
[01:38:00 - 02:06:00] Wrap-Up and Viewer Engagement
- Jeff Walton thanks participants and plans weekly episodes focusing on earnings next.
- Ben Werkman marvels at the large audience for a late-night discussion.
- Grain of Salt reflects on the event’s success compared to past professional launches.
- The group answers viewer questions on note maturities and other company opportunities.
Notable Quotes
Purpose of True North
The whole goal of this is to provide a really a beacon of light with some of the investors that have spent thousands of hours of research on MicroStrategy aka Strategy and Bitcoin.
Jeff Walton @punterjeff
Bitcoin Custody
Saylor is speaking from the perspective of his peer group. And I think a lot of the comments that he has made have been taken out of context.
Adrian Morris @Adrian_R_Morris
Corporate Strategy
He's the only strategy that's incentivized to bring other people in on the strategy.
Ben Werkman @BenWerkman
Options Perspective
I used to just sell covered calls mechanically. But now, the catalysts are so convincing that I've pared back my shorts like 75%.
Soleil @nithusezni
Conference Experience
It was the best event I went to in my whole professional career, like the past 35 years.
Grain of Salt @Z06Z07
Bitcoin's Importance
Bitcoin's most important story and technology of our time. And now MicroStrategy is and will become even more the most important corporate story in the history of finance.
Tim Kotzman @TimKotzman
Future Growth
This next 12 to 18 months is going to be insane, but I don't think it even ends. It's obviously not going to end there.
Dylan LeClair @DylanLeClair_
Valuation Multiples
If this is the richest country on earth, if this is the richest public company on earth, then we're talking about a MNAV at 10 or 20.
Ryan McGinnis @ryQuant
Net Asset Value
MNAV is just kind of an arbitrary metric. The point here is, obviously, that's not the real multiple.
Dan Hillery @hillery_dan
Apple's Mistake
The worst financial move Apple has ever made and will ever make at any point in their future was the $110 billion stock buyback instead of buying Bitcoin.
Jeff Walton @punterjeff
Bitcoin Yield
I think Sailor realizes and MicroStrategy realizes they have a real shot to actually create a new metric or unit of measure in finance.
Dylan LeClair @DylanLeClair_
Market Repricing
This is what a repricing event looks like. It's violent to the upside.
Ryan McGinnis @ryQuant
Options Exercise
The incentive and opportunity cost of capital is much heavier weighted towards exercising than it is towards selling.
Jeff Walton @punterjeff
Selling Caution
I'm so terrified to sell covered calls on MicroStrategy because I know I'm getting my face ripped off.
Ben Werkman @BenWerkman
Audience Growth
Midnight on the East Coast. We've got 9,500 people in here. This is wild.
Ben Werkman @BenWerkman
Questions & Answers
Question 1: Why is True North created?
Answer: Jeff Walton explains that True North serves as a reliable guide for new investors amid expected confusion and misinformation about MicroStrategy and Bitcoin due to rapid market growth.
Question 2: What is Michael Saylor’s view on Bitcoin custody?
Answer: Adrian Morris and the group discuss that Saylor advocates institutional custody for large entities, as self-custody poses high risks for companies holding billions in Bitcoin.
Question 3: Is government seizure of Bitcoin likely?
Answer: Ben Werkman and Adrian Morris argue that a direct seizure like 1933 gold is improbable; any action would involve deals with banks, and enforcement is challenging in a global context.
Question 4: How should MicroStrategy be valued?
Answer: The group, including Jeff Walton and Dan Hillery, notes that net asset value is just one metric; future growth, narratives, and Bitcoin holdings drive higher multiples beyond simple calculations.
Question 5: What makes MicroStrategy’s strategy unique?
Answer: Ben Werkman highlights that Saylor invites competitors to adopt Bitcoin, as it boosts Bitcoin’s price, allowing MicroStrategy to issue more shares and acquire more Bitcoin ahead.
Question 6: Will more companies adopt Bitcoin?
Answer: Dylan LeClair predicts an explosion in companies adding Bitcoin to balance sheets, starting small but growing, inspired by MicroStrategy’s open-sourced playbook.
Question 7: What is the forestry management analogy for investments?
Answer: Soleil uses Jeff Walton’s idea that like trees harvested at optimal growth, companies adopting Bitcoin strategies should be invested in during their high-growth phases for best returns.
Question 8: How might big companies enter Bitcoin without causing a surge?
Answer: Grain of Salt suggests buying Bitcoin quietly over time via multiple exchanges to avoid announcements sparking immediate market reactions.
Question 9: What happens if convertible notes mature below conversion price?
Answer: Ben Werkman states that MicroStrategy would likely refinance or roll over the notes, given strong demand for their Bitcoin-linked products.
Question 10: Why exercise January 2025 options instead of selling?
Answer: Jeff Walton explains that deep in-the-money options holders prefer exercising to buy shares cheaply, avoiding taxes and capitalizing on future catalysts.
People and Organizations Mentioned
- Jeff Walton: Host of the stream, finance expert focusing on MicroStrategy game theory; known as @punterjeff on X, active in Bitcoin and options analysis.
- Adrian Morris: Participant, IT and AI consultant discussing Bitcoin custody; @Adrian_R_Morris on X, contributes to MicroStrategy community insights.
- Tim Kotzman: Participant, private equity firm runner emphasizing Bitcoin education; @TimKotzman on X, hosts interviews on Bitcoin topics.
- Dan Hillery: Participant, electrical engineering student interested in options; @hillery_dan on X, creates content on MicroStrategy.
- Ben Werkman: Participant, algorithmic trader obsessed with MicroStrategy; @BenWerkman on X, writes long-form posts on financial strategies.
- Grain of Salt: Participant, retired tech professional managing portfolio; @Z06Z07 on X, shares investment positions publicly.
- Soleil Nitu: Participant, options seller funding MicroStrategy positions; @nithusezni on X, produces daily videos on strategies.
- Dylan LeClair: Participant, works at MetaPlanet on Bitcoin strategies; @DylanLeClair_ on X, analyzes Bitcoin markets and institutional adoption.
- Ryan McGinnis (RyQuant): Participant, late arriver focused on fun and long-term trades; @ryQuant on X, co-hosts QuantBros discussions.
- Michael Saylor: MicroStrategy CEO mentioned for his Bitcoin video and strategy; founder of MicroStrategy, prominent Bitcoin advocate with over 250,000 BTC holdings.
- MicroStrategy (MSTR): Central company discussed, holds large Bitcoin reserves; publicly traded software firm pivoting to Bitcoin treasury strategy.
- Bitcoin (BTC): Core asset discussed as digital money and investment; decentralized cryptocurrency created by Satoshi Nakamoto in 2009.
- Doc Kruger (Fred Krueger): Hosted Bitcoin First conference; Bitcoin educator and analyst, organizes events for investors.
- MetaPlanet: Dylan LeClair’s company adopting Bitcoin strategy; Japanese firm inspired by MicroStrategy, focusing on Bitcoin holdings.
- Apple: Mentioned for missed Bitcoin opportunity; tech giant led by Tim Cook, known for iPhones and large cash reserves.
- BlackRock: Custodian and ETF provider for Bitcoin; asset management firm managing trillions, launched iShares Bitcoin Trust (IBIT).
- Fidelity: Bitcoin custodian option; financial services firm offering Bitcoin ETFs and custody services.
- FTX: Referenced as failed exchange; defunct crypto platform led by Sam Bankman-Fried, collapsed in 2022 due to fraud.
- GameStop: Compared to potential MicroStrategy frenzy; retailer famous for 2021 short squeeze driven by Reddit’s WallStreetBets.
- WallStreetBets: Reddit community mentioned for rapid growth; subreddit focused on high-risk trades, sparked GameStop mania.
- Motley Fool: Criticized for poor MicroStrategy article; investment advice site providing stock analysis and newsletters.
- Paul Tudor Jones: Investor praising Bitcoin; hedge fund manager at Tudor Investment Corporation, early institutional Bitcoin adopter.
- Elon Musk: Tesla’s Bitcoin announcement referenced; CEO of Tesla and SpaceX, influential in crypto via Twitter (now X).
- Tesla: Company that bought Bitcoin; electric vehicle maker led by Elon Musk, added Bitcoin to balance sheet in 2021.
- NVIDIA: Stock compared for gains; semiconductor company leading in AI chips, part of Magnificent Seven stocks.
- Amazon: Analogy for MicroStrategy’s capital markets role; e-commerce giant founded by Jeff Bezos, diversified into cloud services.
- BRICS: Mentioned for digital assets in trade; alliance of Brazil, Russia, India, China, South Africa exploring alternatives to USD.
- Eric Semler: TCS Capital founder adopting Bitcoin; hedge fund manager following MicroStrategy’s playbook for his firm, Semler Scientific.
- Hal Finney: Early Bitcoin visionary quoted; computer scientist who received first Bitcoin transaction, advocated for bank custody.
- Rosetta Stone: Company in Google trademark case; language learning software firm, lost lawsuit allowing trademark bidding in ads.
- Google: Won trademark AdWords case; tech giant under Alphabet Inc., dominant in search and advertising.
- WareHauser: Forestry company using calculus for harvests; timber REIT managing forests in the Pacific Northwest.
- EY (Ernst & Young): MicroStrategy’s auditor; Big Four accounting firm providing audit and consulting services.
- FASB (Financial Accounting Standards Board): Mentioned for fair value rules; independent organization setting U.S. accounting standards.
- MSCI: Index for potential MicroStrategy inclusion; provider of global equity indexes used by investors.
- QQQ (Invesco QQQ Trust): ETF for possible inclusion; tracks Nasdaq-100, popular for tech-heavy investments.
- Russell: Index rebalance mentioned; part of FTSE Russell, provides market indexes like Russell 2000.
- S&P 500: Potential inclusion discussed; benchmark index of 500 large U.S. companies maintained by S&P Dow Jones Indices.
- Coinbase: Bitcoin custodian; crypto exchange platform offering custody services for institutions.
- Blockstream: Created CMSTR product; blockchain company developing Bitcoin sidechains and products.
- Semler: Likely Eric Semler of TCS Capital; investor in Bitcoin strategies for his company Semler Scientific.