(Bloomberg) — Famed short-seller Jim Chanos denounced Strategy’s Michael Saylor for using a misleading model to value his crypto-treasury firm and reemphasized his recommendation to short its shares and buy Bitcoin instead.
“Michael Saylor is a wonderful salesman,” Chanos said during a Bloomberg TV interview on Wednesday. While the executive chairman of Strategy argued his business should not be valued just on the basis of its Bitcoin holdings, Chanos called that “financial gibberish.”
“This is akin to saying my house that rose in value from $450,000 to $500,000 last year is not worth $500,000. It’s worth $1.5 million because it is worth $500,000 plus a 20 multiple on the $50,000 increase,” Chanos said. “Of course, that’s absurd. But that is the claim he is making.”
Chanos also pointed out that the market for preferred shares, which Saylor touted as a robust pool for raising capital, is “tiny” relative to common shares.
Saylor’s firm, which was formerly known as MicroStrategy, has sold roughly $35 billion worth of securities since 2024 to fund Bitcoin purchases. That includes $33 billion in common shares and convertible bonds as well as about $2 billion in preferred units issued in recent months.
“In his own words, he makes the case that you have to be crazy to buy these preferreds. He will pay a dividend, maybe. It’s not redeemable. It’s perpetual. If I don’t pay the dividends, they are not cumulative. I don’t have to pay them back. Who in their mind institutionally would buy these preferreds?” Chanos said.
Strategy did not immediately respond to a request for comment.
Chanos noted that the company’s so-called mNAV — the stock’s premium relative to the value of its Bitcoin holdings — currently stands at about 1.8 times, nearing its historic average, and “it should be 1.” He said he put on the trade and advised clients when the level was between 2.2 and 2.3 times.
Saylor previously said if the premium declines enough, Strategy will buy back its common shares. “I can assure you that if it trades below 1, I will have covered my shorts,” Chanos said.
In the same interview, the short seller also discussed his bearish bet on used car retailer Carvana Co. — a position he initially developed in 2022 and 2023. He is revisiting it now after the company’s stock gained nearly 100%. Chanos claimed that about 70% of Carvana’s operating income over the past year comes from the sale of subprime loans, but that revenues from car sales are declining. What’s more, a dramatic increase in the stock’s insider selling over the past two months is a warning sign, he added.
–With assistance from Carmen Reinicke.
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