...is a call that has been vindicated. Strategy’s share price premium has slid from nearly 3 times net asset value last November (when FTAV first talked about its funding plans) to around 1.2 times today. Bitcoin has risen by approximately a third over the last 12 months, while Strategy’s stock has fallen by more than a quarter. So much for Strategy’s grand claim to offer “amplified bitcoin”. In sum, Chanos identified a basic arbitrage opportunity and had the sang-froid to execute it. By closing the position now, he’s suggesting the easy gains are in the bag.

If a burst of Saylor-fuelled retail enthusiasm had sent the shares rocketing, Chanos could have been forced to capitulate at a painful loss, much like Melvin Capital when it was steamrollered by Reddit-organised traders during the GameStop saga. The mania risk was very real, given Saylor’s relentless online presence and uncanny ability to rouse and arouse his digital fanbase.

Chanos presumably had more faith in the investing public, believing the market would conclude that Strategy’s rococo baroque architecture offered an overwrought, overpriced way to gain bitcoin exposure. The lofty NAV premium, in his view, had nowhere to go but down.

"Amplified bitcoin is more like nullified bitcoin."

In a way, Chanos has simply mirrored what Strategy and its C-suite have been doing. The company has been actively selling its own shares to buy more bitcoin. Meanwhile, management has also been enthusiastic sellers of Strategy stock, with a significant portion of their disposals impeccably timed near the all-time highs a year ago.

"For all the noise and theatrics, the company remains an expensive and risky wrapper for bitcoin exposure."

perpetual preferreds from a junk-rated issuer like Strategy aren’t an easy sell, so the coupon has to be enticingly high. The new euro issue had to be sold at 80 per cent of face value, giving buyers a yield of 12.5 per cent once you factor in the original issue discount. And those coupon payments, along with the interest on the convertibles, now run to over $700mn annually (#1275872)

Since Strategy doesn’t generate operating cash flow, it ends up issuing more equity or more preferreds simply to service the dividends, piling further pressure on the common stock that sits at the bottom of the capital structure.