MicroStrategy (MSTR) Leverages Bitcoin Surge Amid Stock Volatility

Dec 05, 2024

MicroStrategy Inc. (MSTR, Financial) has seen its stock price soar over fivefold this year, captivating retail investors. CEO Michael Saylor capitalized on this momentum to expand the company's Bitcoin reserves. MicroStrategy issued over $6 billion in convertible notes, attracting hedge funds like Calamos Advisors for market-neutral arbitrage strategies. These notes allow investors to profit from stock volatility.

Saylor has accumulated around $40 billion in Bitcoin over four years, aiming to transform the software firm. Recently, he announced plans to raise $42 billion through stock and fixed-income securities over three years. Since late October, MicroStrategy bought $13.5 billion in Bitcoin and issued $3 billion in zero-coupon convertible notes.

MicroStrategy's stock volatility, with an average daily swing of 5.2% compared to the S&P 500's 0.6%, makes it attractive for arbitrage. The company's convertible bonds are priced to offer significant arbitrage opportunities, making MicroStrategy the largest global issuer this year.

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I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.

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