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MicroStrategy Incorporated (MSTR $434.58)
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Harvest MicroStrategy Enhanced High Income Shares ETF (MSTE $18.13)
" The Harvest MicroStrategy Enhanced High Income Shares ETF invests all its assets, directly or indirectly, in Class A shares of MicroStrategy. MicroStrategy provides business intelligence, mobile software, and cloud-based services. The company’s securities have developed into a Bitcoin treasury holding company, due to its substantial holdings in the world’s premier digital currency."
I take it from the last sentence that it has evolved into a " proxy for Bitcoin " . Is that correct ? And from it's historical high to it's current trading level it has fallen 9.9% . Is that correct ? And looking at it's history of dividend payments { it has paid four dividends . Two of .66 and two of .60 } I come up with a 40% dividend { based on the lessor of the two dividend rates } ..... Is that correct ?
Personally I am from the Jamie Dimon school of crypto-currency ..... The stuff has no value whatever. But I can't deny the steady growth since someone came up with the idea of " Let's make a currency for criminals the government hasn't regulated " ......
So what am I buying here ? A less volatile method of investing in Bitcoin with a honking big dividend ? Or if one is so interested, is Bitcoin itself the better choice ? .....
Thanks for your terrific service ......
MSTR is the largest corporate holder of bitcoin, but has taken on $8B in debt in order to get its holdings. It is essentially a bitcoin company, trading at a premium to the value of its bitcoin holdings. It issues stock or debentures, buys bitcoin, and then repeats the process. It will work out fine, as long as bitcoin keeps going up. It has a lot of detractors (9% short), and the stock is exceptionally volatile. The CEO is a bitcoin evangelist, trying to get other companies to hold bitcoin in treasury (talking his book, of course). The stock's volatility results in high option premiums, and this is why MSTE can pay high yields. But the payout will vary widely, and if we look at similar US ETFs, the distribution will be part return of capital, which results in net asset value erosion (more paid out than earned). Indicated yield is 41.31% and three month return is 43%. But things will go very differently, and badly, if bitcoin turns the other way, or crashes like it has in the past. Investors need to be careful here. This is the type of fund that could easily fall 50% if conditions were 'bad'. It's not a bad fund in that it does exactly what is intended, but we are worried investors will be attracted to the high yield and not look at the risks. Because of the big premium on MSTR, we do think a bitcoin ETF is a better bet for the sector. There is also a similar high yield ETF on bitcoin itself, BTCI, which may be of interest.