Explore MicroStrategy's 2025 strategies, Bitcoin trends, and market insights in this engaging livestream True North episode.
Timestamp Overview
[00:00:40 - 00:03:29] Introduction and New Year Greetings
- Jeff Walton welcomes listeners to the new year 2025, expressing excitement for future prosperity.
- He notes the group’s challenges with illnesses but proceeds with the discussion on recent events.
- Jeff explains that MSTR True North is like an investment club conversation broadcast publicly.
- He mentions community growth and volatility in MicroStrategy’s stock price.
[00:03:29 - 00:06:50] Community Statistics and Updates
- Jeff discusses the “Irresponsibly Long MicroStrategy” community’s growth to 25,000 members as a sign of new interest.
- He highlights new split-off communities like “High T MicroStrategy” for longer-term views.
- Jeff shares statistics on MicroStrategy’s leverage ratio and recent Bitcoin purchases.
- Dan Hillery clarifies that the leverage ratio relates to Bitcoin holdings, not market capitalization.
[00:06:50 - 00:09:29] Leverage Ratio and Risk Framework
- Ben Werkman explains MicroStrategy’s risk framework, aiming for 20-40% leverage on Bitcoin’s value.
- He notes the company is under-leveraged at 18%, suggesting room for more debt.
- Jeff calculates that Bitcoin would need to drop significantly for assets to equal liabilities.
- Ben emphasizes this drop wouldn’t cause liquidation, providing a safety buffer.
[00:09:29 - 00:13:09] Financial Advice Disclaimer and Merch
- Tim Kotzman reminds listeners that content is educational, not financial advice.
- Soleil Nitu jokes about improving trades with MSTR True North merchandise.
- Jeff promotes their merch shop and plans to use funds for events like MicroStrategy World.
- He expresses optimism for Bitcoin developments in 2025.
[00:13:09 - 00:15:47] Upcoming Catalysts Overview
- Jeff introduces the catalyst tracker on MSTR Moon for key dates affecting MicroStrategy.
- He warns that not every catalyst guarantees positive price action, as they are public information.
- Soleil stresses viewing catalysts holistically, not pinning hopes on individual events.
[00:15:47 - 00:21:44] January 17th Options Expiration
- Jeff explains the historic January 17, 2025, options expiration from contracts bought in 2022.
- He notes deep-in-the-money contracts and potential for exercising due to high yields.
- Dan Hillery mentions Josh Mandel’s experience in market making and hedging.
- Jeff discusses market makers’ hedging challenges leading to high trading volume.
[00:21:44 - 00:25:25] Market Dynamics and Volatility
- Jeff highlights MicroStrategy’s top trading volume despite its market rank.
- Grain of Salt shares Josh Mandel’s pinball analogy for unpredictable price overshoots.
- He advises preparing positions in advance for potential rapid movements.
[00:25:25 - 00:28:37] Exercising Options Strategies
- Jeff shares his plan to exercise options gradually, noting tax advantages.
- Soleil warns to check platform mechanics for exercising, as some require calls.
- Jeff emphasizes understanding cash needs and varying broker processes.
[00:28:37 - 00:32:07] Margin Requirements and Other Catalysts
- Soleil suggests margin hikes might limit liquidity as a conspiracy.
- Jeff notes rare margin increases, like in GameStop, signal market pressure.
- Soleil views catalysts as repricing opportunities but not trade guarantees.
[00:32:07 - 00:35:01] Long-Term Thesis on MicroStrategy
- Soleil describes MicroStrategy as disrupting markets by “counterfeiting” money to buy Bitcoin.
- He advises against high expectations from catalysts to avoid disappointment.
- Jeff agrees, noting inclusions like QQQ provide ongoing upward pressure.
[00:35:01 - 00:40:43] Insights from 100K Bitcoin Party
- Jeff recounts conversations at Michael Saylor’s party, including congratulations on QQQ inclusion.
- Tim shares Saylor’s low expectations and independent business plan.
- Ben notes Saylor’s awareness of shareholder sentiments and market confusion.
[00:40:43 - 00:46:00] Saylor’s Views and Market Misunderstandings
- Ben explains Saylor’s surprise at QQQ inclusion and monitoring of communities.
- He highlights differences in retail vs. institutional reactions to price moves.
- Jeff describes party interactions, noting Saylor’s enthusiasm for 2025.
[00:46:00 - 00:51:36] Interactions with MicroStrategy Team
- Ben praises Shirish Jajodia’s energy in treasury management.
- Jeff notes the team’s hard work, even on holidays, for future plans.
- Group discusses notable attendees like Max Keiser and the Millers.
[00:51:36 - 00:55:35] Short Sellers and Bears
- Dan Hillery critiques Martin Shkreli’s short position and leverage.
- Ben mocks uninformed shorts exaggerating leverage risks.
- Jeff respects real-money shorts but questions their logic.
[00:55:35 - 01:00:00] Valuation and Earnings Debates
- Ben argues Bitcoin per share builds an increasing value floor.
- Jeff suggests new metrics like four-year PE ratios for Bitcoin cycles.
- Group emphasizes comparing market caps for true value assessment.
Notable Quotes
New Year Excitement
We are going to have a fantastic year and I'm excited for where things are going to be headed.
Jeff Walton @punterjeff
Investment Club Style
Our goal is to effectively make this like an investment club where we're having a conversation with each other that we just happen to broadcast externally.
Jeff Walton @punterjeff
Leverage Buffer
They have buffer. They have significant buffer.
Jeff Walton @punterjeff
MicroStrategy Thesis
They're disrupting and they're the clear winner. And that's really the only thing that I really need to know long-term about this particular investment thesis.
Soleil Nitu @nithusezni
Market Understanding
If you get a very surface understanding of something particularly in equity like this, you're not going to understand why it moves and when it moves.
Ben Werkman @BenWerkman
Pinball Analogy
It's very hard to predict when that happens and how high and how fast it can go.
Grain of Salt @Z06Z07
Options Learning
You kind of just have to do it... math is different when there's emotion involved.
Jeff Walton @punterjeff
MSTY ETF
It'll underperform spot, but anybody who wants to generate income and doesn't want to watch 300 of my videos to figure that shit out, go for it.
Soleil Nitu @nithusezni
New People in Market
As the new people come in and get excited about it... they don't do appropriate risk management and position sizing.
Grain of Salt @Z06Z07
Earnings Perception
It's funny to me that people have gotten so tied to the source of where it's coming from.
Ben Werkman @BenWerkman
Bitcoin Per Share
Bitcoin per share matters a lot. People don't get that yet, but it does matter a lot.
Ben Werkman @BenWerkman
Valuation Perspective
The only thing that you can really compare is market cap.
Jeff Walton @punterjeff
Insurance Challenges
A lot of California is just uninsurable.
Jeff Walton @punterjeff
Questions & Answers
Question 1: What is MSTR True North?
Answer: Jeff Walton describes MSTR True North as a weekly discussion group on MicroStrategy developments, styled like an investment club conversation shared publicly.
Question 2: Why is the community growth significant?
Answer: Jeff Walton views the “Irresponsibly Long MicroStrategy” community’s expansion to 25,000 members as a signal of new interest, similar to Google search trends for gauging popularity.
Question 3: What is MicroStrategy’s leverage ratio?
Answer: Jeff Walton and Ben Werkman explain it as 17.9%, below the historical average, indicating room for more debt without high risk.
Question 4: What catalysts are upcoming for MicroStrategy?
Answer: Jeff Walton and Soleil Nitu discuss events like options expirations and potential index inclusions, noting they are public and may not always boost prices.
Question 5: Why is January 17th options expiration historic?
Answer: Jeff Walton highlights contracts from 2022 now deep in-the-money, with potential for exercises driving market activity due to Bitcoin’s rise.
Question 6: What was discussed at the 100K Bitcoin party?
Answer: The group shares insights from talks with Michael Saylor, who expressed low expectations for events like QQQ inclusion and optimism for 2025.
Question 7: What is the view on short sellers like Martin Shkreli?
Answer: Dan Hillery and Ben Werkman critique Shkreli’s leveraged short position, noting it seems uninformed about MicroStrategy’s actual leverage.
Question 8: How does FASB change affect MicroStrategy?
Answer: Jeff Walton suggests it could lead to positive earnings, qualifying for S&P 500, though not an immediate repricing event.
Question 9: What are pros and cons of MSTY ETF?
Answer: Soleil Nitu and Jeff Walton note it generates high yields but underperforms spot holdings and involves fees and taxes.
Question 10: What impact does the LA fire have?
Answer: Jeff Walton predicts massive uninsured losses and higher insurance rates nationwide due to reinsurance effects.
People and Organizations Mentioned
- Jeff Walton: Host of MSTR True North, discusses MicroStrategy updates and personal strategies; known as @punterjeff on X, active in Bitcoin and finance communities.
- Ben Werkman: Contributor explaining financial frameworks like leverage; @BenWerkman on X, focuses on corporate finance analysis.
- Soleil Nitu: Shares options strategies and long-term thesis; @nithusezni on X, creates educational content on trading.
- Dan Hillery: Comments on market makers and shorts; @hillery_dan on X, involved in financial discussions.
- Tim Kotzman: Provides disclaimers and event updates; @TimKotzman on X, emphasizes educational content.
- Grain of Salt: Discusses market analogies and events; @Z06Z07 on X, plans community gatherings.
- Michael Saylor: MicroStrategy CEO, mentioned for party insights and strategies; founder of MicroStrategy, prominent Bitcoin advocate.
- Josh Mandel: Options expert referenced for market predictions; former bond trader at Salomon Brothers, known for financial insights.
- Martin Shkreli: Criticized for shorting MicroStrategy; former pharma executive, convicted of fraud, active in finance commentary.
- Jason Calacanis: Mentioned as a short seller; investor and podcaster, known for “All-In” podcast and angel investing.
- Shirish Jajodia: MicroStrategy treasury head, praised for enthusiasm; key in financial engineering at the company.
- Max Keiser: Party attendee, discussed El Salvador; financial broadcaster, Bitcoin maximalist on RT and podcasts.
- Bill Miller Sr. and Bill Miller IV: Investors at the party; legendary value investors, Miller Value Partners, early Bitcoin supporters.
- MicroStrategy: Central company discussed for Bitcoin holdings and strategies; Nasdaq-listed software firm turned Bitcoin treasury manager.
- Wall Street Journal: Publication obsessed with host’s whiskey; major financial news outlet.
- Financial Times: Bewildered by MicroStrategy; global business newspaper.
- Irresponsibly Long MicroStrategy: X community for enthusiasts; large online group tracking the stock.
- High T MicroStrategy: Split-off community for long-term views; niche X group with humorous branding.
- MSTR Moon: Catalyst tracker site; resource for MicroStrategy event timelines.
- HODL Shop: Merchandise seller; Bitcoin-themed store supporting the group.
- MSTY: ETF for covered calls on MicroStrategy; yield-generating fund by Defiance ETFs.
- DTCC: Mentioned in comments; Depository Trust & Clearing Corporation, handles securities settlements.
- State Farm: Insurance example; major U.S. insurer, referenced in cancellation frustrations.
- California Fair Plan: State insurer of last resort; provides limited coverage for high-risk areas.