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Famous Greek-American investment manager Jim Chanos raised concerns with MicroStrategy and other companies copying its Bitcoin game plan.
Chanos stated in an interview with CNBC on May 14 that MicroStrategy is essentially using the hyped-up version of Bitcoin to artificially raise their stock prices.
“I don’t know where Bitcoin is going—maybe $100,000 or maybe $10,000,” Chanos said. “But what I do know is some companies are making money by buying Bitcoin cheap and selling their stock at a much higher price."
Chanos is best known for founding Kynikos Associates, a hedge fund focused on short selling. He rose to fame for correctly betting against Enron before its collapse in 2001. Chanos specializes in identifying companies he believes are overvalued or built on shaky fundamentals — earning him a reputation as Wall Street’s most prominent short seller.
In the interview, he stated, "MicroStrategy, and now other imitators, is raising money from investors, spending that money on Bitcoin, and telling investors that because they own Bitcoin, they should be valued higher. “They’re buying something for $1 and selling it for $2.50,” he said.
In simple terms, Chanos believes that these companies are taking advantage of the excitement of investors about Bitcoin to artificially inflate their market valuations. He cautioned that the increased stock price does not equate to the actual value of what that company owns.
Chanos believes MicroStrategy's Bitcoin-strategy is “ridiculous" and "too leveraged”. He also went on to say that he is "long on Bitcoin but short on MicroStrategy".
On May 7, Strive Asset Management merged with Asset Entities to establish the first public Bitcoin treasury firm, with the goal of achieving $1 billion in tax-free BTC transactions and a NASDAQ debut.
On May 12, KindlyMD, a healthcare firm, also merged with Nakamoto, a Bitcoin native, to establish a Bitcoin treasury strategy. Notably, both these companies are following MicroStrategy’s playbook.
Interestingly, according to The Wall Street Journal, in 2023, Chanos closed his hedge fund Kynikos Associates and returned money to investors. The market had climbed almost 20% in 2023, and Tesla - which Chanos had bet against - was up 117%.