Short-seller Chanos questions bitcoin-holding pioneer Strategy’s valuation premium

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(Reuters) -Prominent short-seller Jim Chanos has questioned Strategy’s valuation premium over its bitcoin holdings, saying Chairman Michael Saylor’s tactics to boost the company’s returns are “financial gibberish.”

“…Mr. Saylor wants you to value his business based not only on the net value of his Bitcoin holdings (NAV) at market, but additionally with a multiple on the change in that NAV…,” he said in a post on X on Tuesday.

Also, in an interview with Bloomberg Television on Wednesday, Chanos said that Strategy’s market value should not exceed the value of its bitcoin holdings.

As of June 9, the company held 582,000 bitcoins, worth $62.27 billion, while its market value of $108 billion was about 1.74 times its crypto holdings.

Chanos and other Strategy critics have argued that this disconnect was creating an arbitrage opportunity for buying the cryptocurrency and shorting the firm’s shares.

Strategy did not immediately respond to a Reuters request for comment.

MIMICKING STRATEGY

Following Strategy’s footsteps, companies like GameStop and U.S. President Donald Trump’s Trump Media & Technology have also pivoted their operations to building bitcoin reserves.

Strategy’s shares are up nearly 34% this year, eclipsing bitcoin’s 14.2% climb.

Saylor has argued that critics overlook his company’s innovative use of bitcoin-backed financial instruments, which he insists justify the premium at which the company trades and protect it from the risks Chanos highlights.

The company actively issues bitcoin-backed credit instruments, such as non-cumulative preferred stock, allowing it to raise capital without diluting common shareholders or taking on traditional debt obligations.

(Reporting by Ateev Bhandari in Bengaluru; Editing by Anil D’Silva)