According to the “Big Short” form from the investment research company Fintel, as of June 6, MicroStrategy has 18 short positions with a total value of up to $6.9 billion. The form is compiled based on information disclosed to the U.S. Securities and Exchange Commission (SEC) by institutions, revealing the institutions’ largest short positions. The largest short position in the form is approximately $2.4 billion, ranking 27th overall.
Although some investment institutions predicted that the stock price of MicroStrategy would fall and invested accordingly, confidence in this prediction is actually decreasing. This can be seen from the significant decrease in the company’s “days to cover ratio”.
The days to cover ratio refers to the average number of days that short positions are held, and this indicator has decreased from 3.1 days to 1.5 days in the past six months. This indicates that investors shorting the stock are holding it for a shorter period of time, showing that their expectations for further price declines are no longer as firm.
Although the list does not specifically disclose the names of the short-selling institutions, some institutions have publicly stated their intention to short MicroStrategy. According to a previous report by Zombit, the short-selling institution Kerrisdale Capital stated in March of this year that MicroStrategy’s stock was overvalued, and the company currently holds a short position in MicroStrategy, while also holding long positions in Bitcoin spot ETFs from BlackRock and Fidelity to hedge against upside risks.
Kerrisdale Capital’s logic is that with several Bitcoin spot ETFs approved this year, investors have almost no reason to gain Bitcoin exposure through trading MicroStrategy stock. Furthermore, during the period of Bitcoin’s rise, the speed at which MicroStrategy’s stock price rose was much higher than that of Bitcoin, leading to a premium of MicroStrategy relative to Bitcoin, which has attracted many institutions to start trading this “MicroStrategy stock (MSTR) and Bitcoin price spread”.
