4. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 21
Float Shorted: 40.43%
Stock Price as of June 14: $152.15
MicroStrategy Incorporated (NASDAQ:MSTR) is a Tysons, Virginia-based provider of business intelligence, cloud-based services, and mobile software.
The stock has been heavily shorted because MicroStrategy Incorporated (NASDAQ:MSTR) could be forced to stake more tokens against its bitcoin-backed loan or risk a margin call on the loan due to a significant dip in Bitcoin price. If the price of bitcoin falls below the $21,000 level, MicroStrategy Incorporated (NASDAQ:MSTR) would have to inject more capital or liquidate the collateral of the loan, which is 19,466 bitcoins. MicroStrategy Incorporated (NASDAQ:MSTR) had obtained the loan from San Diego, California-based crypto bank Silvergate Capital. In the past six weeks, Bitcoin has lost 40% of its value, while MicroStrategy Incorporated (NASDAQ:MSTR) has declined by 25%.
MicroStrategy Incorporated (NASDAQ:MSTR) was discussed in the Q1 2021 investor letter of Alger. Here’s what the firm said:
“MicroStrategy Incorporated was among the top contributors to performance. MicroStrategy is a global leader in enterprise analytics software and services. MicroStrategy’s core software platform provides customers with visualization and reporting capabilities, mobility features, and custom applications to help with complex business questions. Today, MicroStrategy has over 4,000 customers worldwide. In August 2020, MicroStrategy decided to make bitcoin its preferred reserve currency. To date, MicroStrategy has purchased over 90,000 bitcoins at an aggregate purchase price of $2.17 bi11 ion and an average price of over $23,985 per bitcoin. Going forward, MicroStrategy plans to use excess cash generated by its core business to purchase additional bitcoin.
Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continue to transition to a cloud-based subscription model.”
MicroStrategy Incorporated (NASDAQ:MSTR) was held by 21 hedge funds as of Q1 2022.
