"More Bitcoin, please." Image: Shutterstock
- Bill Miller is value investor who likes Bitcoin.
- MicroStrategy is a business that sold securitized debt to finance larger Bitcoin purchases.
- In an investor letter, Miller explained why his fund bought the MicroStrategy bonds.
In an investor letter dated January 21, he explained Miller Value Funds recent purchase of MicroStrategys 0.75% convertible bond. Its all about the Bitcoin.
MicroStrategy, a business intelligence company that trades on Nasdaq, holds 70,784 Bitcoin (after it purchased another $10 million worth this week), currently valued at $2.3 billion. After already betting big on BTC throughout 2020, late last year the Michael Saylor-led company sold $650 million in debt securities in order to buy more.
Millers firm bought the convertible security, which pays out 0.75% in annual interest and can be converted into stock and/or cash, depending on several factors.
In our assessment there was very little downside and an almost-free call option on Bitcoin, he wrote. MicroStrategy now owns more Bitcoin than any operating company, which imbues some scarcity value above and beyond the value of the core business and the coins it holds.
Since Millers investment hinged on MicroStrategy going long on Bitcoin, the investor laid out the case for owning Bitcoin.
Almost every long-term holder of Bitcoin has earned a higher rate of return in Bitcoin than in anything else, and those who understand it see little reason to put their excess marginal liquidity into other assets at this point, Miller wrote. The world is ruled by fat-tail events, or seemingly improbable occurrences that have an outsized impact, and all indicators so far ...
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