Jesse Myers, Chief Investment Officer at OnRamp and a Stanford neuroscience grad, delves into MicroStrategy’s new preferred stock strategy. He discusses how this move affects Bitcoin’s role on the company’s balance sheet. Jones offers intriguing insights into Bitcoin’s potential for financial disruption and the significance of appreciating scarcity in investments. He also addresses misconceptions about the economic landscape and speculates on a looming 'debt event horizon'. Plus, he shares his thoughts on influential figures like Elon Musk and the future of the economy.
MicroStrategy's new preferred stock offering allows for higher dividends while enabling strategic acquisitions of Bitcoin amid evolving investor interests.
The podcast discusses Bitcoin's absolute scarcity and its potential to transform global asset allocation, attracting capital from traditional fixed-income markets.
Jesse Myers emphasizes the challenges in fixed-income markets due to inflation, suggesting that Bitcoin may outperform conventional equities over the coming decades.
Deep dives
MicroStrategy's Preferred Stock Strategy
MicroStrategy has recently issued a new round of preferred stock, referred to as Strife, which aims to raise funds for acquiring Bitcoin while providing higher dividends than previous stock offerings. This follows their established strategy of using capital markets to generate Bitcoin yield, ultimately enhancing their overall Bitcoin position. The introduction of Strife, unlike previous convertible notes that offered call options, focuses on providing a fixed annual dividend, making it attractive to potential investors. The oversubscribed nature of the offering indicates strong interest in this innovative funding approach amid concerns about dilution and interest expenses.
The Growth of Bitcoin Market Share
Bitcoin constitutes a small fraction of the total global asset landscape, currently valued at around $2 trillion against a $900 trillion total market. MicroStrategy's strategy involves tapping into the substantial $300 trillion fixed income market, aiming to capture even a small percentage for Bitcoin investment, which could result in significant capital inflows. The discussions suggest that major players, including MicroStrategy, are looking to attract bond market investors by offering better risk-adjusted returns that one can anticipate through Bitcoin's appreciated value over time. This capture of capital from traditional asset classes is seen as a pivotal moment in Bitcoin's trajectory.
Diverse Financing Mechanisms for Bitcoin Acquisition
MicroStrategy has developed multiple financial strategies to maintain and expand its Bitcoin reserves, enabling flexibility in raising capital. The company leverages various methods such as issuing preferred stocks, convertible notes, and even common equity, allowing for cash generation which can be directed towards purchasing Bitcoin. Notably, the introduction of at-the-market programs allows them to issue shares quickly when favorable conditions arise, making it easier to seize opportunities in the volatile market. This multifaceted approach strengthens MicroStrategy's position as a key player in the Bitcoin space, providing multiple channels for future growth.
Bitcoin as a Store of Value
The podcast emphasizes the unique nature of Bitcoin as a digital asset with absolute scarcity, setting it apart from traditional investment vehicles such as bonds and gold. It highlights the historical human pursuit for a reliable store of value and posits that Bitcoin fulfills this role more perfectly than any asset has previously. With forecasts predicting an increase in Bitcoin value, the debate centers around the potential for capital to flow out of bonds and into Bitcoin as inflation erodes the value of traditional fixed income instruments. This shift could catalyze a significant transformation in asset allocation globally, favoring Bitcoin as the ultimate store of value.
The Future of Financial Markets
Looking ahead, the discussion highlights a challenging future for fixed-income markets amidst persistent inflation and rising interest rates. With a significant portion of the global asset landscape at risk of losing real value, investors are increasingly seeking alternatives that can offer genuine appreciation. The conversation indicates that while conventional equities may outperform in nominal terms, they will underperform significantly in Bitcoin terms, positioning Bitcoin as the ultimate asset for growth over the coming decades. This anticipated paradigm shift in the financial landscape is set to redefine how value is perceived and preserved.
Jesse Myers breaks down MicroStrategy’s bold new move, the MSTR preferred stock, and shares big-picture views on Bitcoin, scarcity, and economic transformation.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
02:58 - What MicroStrategy’s new preferred stock offering means for investors.
04:34 - The implications of MSTR’s free cash flow and interest expense dynamics.
07:23 - A sneak peek at Jesse’s Global Asset Value chart and what it reveals.
10:16 - How Bitcoin continues to shape MicroStrategy’s balance sheet and strategy.
15:48 - Whether we’re approaching a “debt event horizon” and what that might mean.
16:33 - Jesse’s insights on Bitcoin yield and accretive dilution.
23:29 - Misconceptions people have about the current economic landscape.
23:49 - Why appreciating scarcity is a key mindset shift in investing.
36:36 - What Jesse’s excited about in today’s rapidly evolving financial world.
37:24 - Jesse’s take on Elon Musk and Howard Lutnick’s vision for rewiring the U.S. economy.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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