As MicroStrategy (MSTR) continues to dilute and supersede common shareholders to add bitcoin (BTC) to its balance sheet, company insiders continue to sell into their bids.
While its leaders boast about the company’s long-term prospects, multi-million dollar BTC price forecasts, and accretive BTC purchases, many well-informed executives are selling shares for personal compensation.
A recent post on the MSTR subreddit, citing data from November, reignited concerns about Securities and Exchange Commission (SEC) Form 4 filings by insiders that have disclosed millions of dollars worth of insider liquidations. Bulls were quick to point out the time delay of that data as well as the positive net effect of MicroStrategy’s dilutive share sales to date.
To be sure, the net result of MicroStrategy’s corporate and insider share sales over the past five years have been indisputably positive for shareholders. Not only has MSTR rallied over 2,000% over that time period, but its BTC holdings per share have also increased — even after adjusting for shareholder dilution and insider sales.
MicroStrategy’s persistent premium to its bitcoin holdings
Believing the company will discover profitable services from its massive treasury and entice volatility bond buyers to fund its BTC debts, MicroStrategy shareholders have bid a premium for its stock since summer 2023 relative to the company’s BTC holdings.
As of publication time, that multiple, casually named its “NAV premium” or “mNAV,” is 1.89X. In other words, MSTR’s market capitalization of $78 billion is 89% more expensive than its BTC holdings of $41 billion.
It’s because of this multiple courtesy of common shareholders that MicroStrategy has been able to accrete BTC per share on a dilution- and insider sale-adjusted basis. Throughout 2024, the company captured this mNAV — which exuberantly exceeded 3.4X in November — to close the year boasting a 12-month, 74.3% “BTC yield.”
Of course, the fact that 74.3% is much lower than today’s 86% and much lower than November’s 240% peak is conveniently omitted from that year-end summary.
Under founder Michael Saylor’s continued leadership as chairman despite his resignation as CEO, MicroStrategy has relentlessly issued debt and shares to acquire a total 450,000 BTC.
On average, the company has gained 46% on its single-minded trade, with the price of BTC substantially higher than its $62,500 cost basis.
MicroStrategy insiders’ options awards and stock sales
The last significant tranche of insider sales by MicroStrategy directors and officers occurred in November. At that time, pre-planned issuances of options from executive compensation packages allowed Jeanine Montgomery, Wei-Ming Shao, and Stephen Graham to convert and sell millions of MSTR into the market.
Saylor also declined to waive his privilege and took advantage of his options award to sell a large chunk of newly-minted MSTR in April 2024.
Read more: What is MicroStrategy’s bitcoin liquidation price?
The divergence between bearish insider selling and the company’s bullish BTC strategy has raised questions for market observers.
If BTC is truly going to $3 million in even the most bearish scenario, as Saylor predicted, recent insider sales by MicroStrategy executives could rank as among the poorest trades in a generation.
On the other hand, if those predictions are simply spinning a tale for the public that does not reflect the conviction of its storytellers, these sales could be prescient insights for more inquisitive researchers.
