Shorting MSTR to earn 100%, how did he consider this trade?

Original Title: How Jim Chanos outplayed Michael Saylor: short MSTR, long BTCOriginal Author: Proto StaffCompiled by: Peggy, BlockBeats

Original author: Rhythm BlockBeats

Source of the original text:

Reprint: Mars Finance

Editor's Note: When Strategy turned “holding Bitcoin via companies” into a belief, Jim Chanos chose to bet in the opposite direction: shorting MSTR and going long on BTC.

Seemingly divergent, yet essentially the same: both sides are exploiting the structural discrepancies in the market, with one leveraging faith and the other rationally dissecting the bubble. In this contest of valuation and liquidity, belief and doubt are not distinctly separate, but rather two choices reflecting upon each other.

The following is the original text:

The famous “cynic” investor Jim Chanos from Wall Street has closed his widely watched and controversial short position against Michael Saylor's Strategy — it is estimated that he achieved about a 100% return by shorting the company's common stock MSTR.

More specifically, this well-known short seller established a paired trade: shorting MSTR while going long on Bitcoin (BTC).

He is not betting that the MSTR stock price will absolutely fall in USD terms, but rather that the premium of MSTR relative to BTC will shrink.

Strategy is one of the largest Digital Asset Treasury (DAT) companies in the world. These publicly traded companies acquire crypto assets through financial leverage rather than relying on traditional product or service sales to generate revenue. The company currently holds approximately $66 billion in Bitcoin (BTC), with an enterprise value of around $84 million (market capitalization plus pro forma net debt including preferred stock), which is equivalent to a 1.27 times premium over its net asset value (mNAV).

However, since Chanos established his position, this mNAV has seen a significant decline.

He established this legged trade in November 2024 to express his skepticism about MSTR's underperformance compared to BTC; as of last Friday morning, Chanos and his firm Chanos & Co. had fully closed their positions, with a book profit of approximately 100%.

Chanos's “Victory Tour” shared on social media has sparked heated discussions, with the related post views exceeding 1 million.

Short MSTR, Long BTC

Chanos's earnings mainly come from the decline in MSTR's net asset multiple (mNAV).

In November 2024, the multiple was once higher than 3 times; by December of the same year, when he elaborated on the investment logic at the annual meeting, the average level had dropped to about 2.5 times. When he completely closed his position, MSTR's mNAV had fallen to 1.23 times—meaning the company's stock price was only 23% above the Bitcoin assets it held.

Meanwhile, another part of his trades is also rising. Since November 2024, the price of Bitcoin has increased by about 25%. In other words, Chanos not only doubled his funds by shorting MSTR, but also earned about 25% in profits due to the rise in Bitcoin.

Both sides profit at the same time, securing this family office fund manager's position as “Saylor's most successful critic.”

Imitate Strategy, Surpass Strategy

Chanos faced fierce criticism from Saylor supporters, including members of the community who identify as “Irresponsibly Long MSTR,” for publicly expressing a bearish view on Strategy at the 2025 New York Sohn Investment Conference.

In multiple television interviews and social media appearances, Chanos has emphasized that his bearish outlook is based on the difficulty for Strategy to maintain a high net asset multiple (mNAV) over the long term.

He once described his trading strategy as: “Sell MicroStrategy's stock and buy Bitcoin—basically buying something for $1 and selling it for $2.5.” He also bluntly criticized Saylor's method of purchasing Bitcoin with leverage as “utterly absurd” and “sheer financial nonsense.”

In fact, Chanos believes that his trading logic is essentially mimicking Saylor himself: selling MSTR and using the proceeds to buy Bitcoin.

Chanos has pointed out multiple times that Strategy's actions of continuously diluting its own equity and persistently selling MSTR in order to buy more BTC are the key incentives that led him to establish this legged trade (shorting MSTR, going long on BTC).

Although Strategy has also financed through the issuance of billions of dollars in preferred shares (which will not directly dilute MSTR equity for the time being), most of its funding still comes from selling MSTR shares.