Top Strategy Critic Asks ‘Fundamental’ Question

Famous short-seller Jim Chanos, who is best known for betting against energy giant Enron before it collapsed in 2001, recently took to the X social media network to question the logic behind Bitcoin treasury companies of the likes of Strategy.

Chanos is asking whether Strategy derives its value from its Bitcoin investment or the market premium to the net asset value (mNAV premium).

Jeff Walton, a prominent Strategy bull, argues that Bitcoin is acting as collateral that makes it possible for the company to raise cheap capital and equity. “It’s almost like this idea is so simple, it sounds too good to be true,” Walton noted. He also pointed out that Strategy boasts eight times more capital than the peak valuation of Kynikos Associates, Chanos’s hedge fund, back in 2008.

Chanos, whose fund specializes in identifying overvalued and fraudulent companies, recently placed a bet against Strategy while simultaneously hedging with Bitcoin buys.

He believes that Strategy’s current premium is unjustified, attributing it to the hype amplified by retail investors. The crux of Chanos’s bet is that this premium will eventually dissipate due to the existence of more efficient alternatives such as Bitcoin ETFs.

Meanwhile, Saylor warned that Chanos could end up getting liquidated if his company’s shares surge. Simon Gerovich, the CEO of Japanese Strategy copycat Metaplanet, is also encouraging the famous short-seller to bet against his company.

Chanos, for instance, has also been a longtime Tesla bear, and this short has backfired for him. In December 2020, he admitted that this was a “painful” bet.