Jimmy Chanos shorts Microstrategy, calls the stock overpriced hype

Jimmy Chanos has announced that he is dumping Microstrategy shares as he prefers to follow the Bitcoin train. Speaking to CNBC’s Scott Wapner during the Sohn Investment Conference, Jim explained that he’s selling the stock and buying Bitcoin because Strategy’s tactic is overpriced and built on inflated assumptions.Chanos, who used to run Kynikos Associates and now advises institutional investors, explained that Strategy’s business model no longer looks like real software. The company, run by chairman Michael Saylor, has turned into a public wrapper around a crypto wallet. The company currently holds over 500,000 Bitcoin, but Chanos said the problem is not the asset; it is how MicroStrategy structured the whole thing. The company borrowed heavily to buy its Bitcoin stash, then started trading at prices way above what its Bitcoin holdings are worth.Jimmy Chanos says strategy is misleading retail investorsJimmy also called out how MicroStrategy and other companies are selling the idea of holding crypto inside a corporate body. He said they are basically telling retail investors that they should assign a high valuation to these companies just because they hold Bitcoin. He called that idea “ridiculous.”“If you look at where MicroStrategy and now, more ominously, some of its copycat companies that are now raising lots of money are doing, they are selling retail investors the idea that we are going to buy bitcoin in a corporate structure. Because of what MicroStrategy has done, you should value us at a similar premium,” Jimmy said.Instead of buying into the idea, Jim said he’s following the opposite side. He’s shorting MicroStrategy stock while buying Bitcoin itself. “We’re doing exactly what MicroStrategy and Michael Saylor are doing,” he said. “We’re selling MicroStrategy stock and buying bitcoin and buying something for $1, selling it for two and a half dollars.”Jimmy believes this setup works in his favor because it exposes the disconnect between the company’s market price and the value of what it owns. And the numbers back that up. Strategy stock has jumped more than 220% over the last year, while Bitcoin only went up 70% in that same period. That’s why Jim said his trade is a “good barometer of not only just the arbitrage itself, but I think of retail speculation.”He didn’t talk much about President Trump during the interview, but the crypto rally since early April has been mainly tied to the President’s tariff announcement. Trump has shown public support for crypto during this period, and prices have followed the tone from his administration. At least for a few months anyway, since, as Cryptopolitan reported this morning, the market has stopped caring about Trump after he pulled one too many insider trading tricks.The post Jimmy Chanos shorts Microstrategy, calls the stock overpriced hype first appeared on Coinfea.