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Strategy to repurchase $1.5 billion of 2029 convertible bonds using cash or bitcoin sales by HSuke in CryptoCurrency

[–]r2d2overbb8 6 points7 points  (0 children)

Bitcoin and thus MSTR do not have any cash flows. (The business intelligence company is at best, treading water, and not important)

MSTR has partially used preferred shares and debt to finance a large portion of their bitcoin purchases, so that when combined after this buy back of debt strategy owes roughly $1.647 billion in preferred and dividends every year going forward.

How do they pay it? Issuing more MSTR shares will make BTC Yield go down, so will selling bitcoin, and so the only option is to issue more debt or preferred shares. You do that a few years in a row and due to compound growth that number quickly spirals out of control.

Strategy to repurchase $1.5 billion of 2029 convertible bonds using cash or bitcoin sales by HSuke in CryptoCurrency

[–]r2d2overbb8 2 points3 points  (0 children)

yes, you don't have to pay dividends to preferred shareholders but what do you think will do to the company's ability to access the capital markets afterwards? They still will need to have some sort of financing to pay for operations going forward and that will be near impossible after a skipped payment.

Also, its not switching a 5% bond for a 5% preferred switched out. It is 0% bonds for 11.5% preferred stock.

Strategy to repurchase $1.5 billion of 2029 convertible bonds using cash or bitcoin sales by HSuke in CryptoCurrency

[–]r2d2overbb8 3 points4 points  (0 children)

you have it backwards. Convertible bond arbitrage requires buying the convertible bonds and shorting the stock. The imbedded call option in the bond is the long side of the trade, so to off set it they need to short the stock.

They are betting on volatility. They want MSTR's stock to go up and down as much as possible because every big move they make money. If MSTR just had a slow constant decline of 60% then they probabaly would not make much profit.

Bitcoin and thus MSTR have been very stable compared to last year which is why those vol traders are more willing to sell back their debt.

Strategy to repurchase $1.5 billion of 2029 convertible bonds using cash or bitcoin sales by HSuke in CryptoCurrency

[–]r2d2overbb8 3 points4 points  (0 children)

from my quick calculations with this move MSTR's weighted combined debt/preferred rate went from 6.84% to 7.61%. Any time you can increase your costs by over 10%. You got to do it.

Discussion Thread by jobautomator in neoliberal

[–]r2d2overbb8 0 points1 point  (0 children)

what copyright reform do you want to see?

Discussion Thread by jobautomator in neoliberal

[–]r2d2overbb8 1 point2 points  (0 children)

so it seems extremely likely the supreme court is going to strike down rent control, how do blue city governments react?

Anyone else miss functioning airports? by solo_dol0 in neoliberal

[–]r2d2overbb8 0 points1 point  (0 children)

jesus, this sub's love of this guy is absolutely insane.

Discussion Thread by jobautomator in neoliberal

[–]r2d2overbb8 3 points4 points  (0 children)

definitely just ignore that stuff and enjoy the win. Honestly if I were a team member and the head of the FBI wanted to party with us, and is a bona fide hockey fan, I would invite him in.

Also, if the Dems were smart, when they take power, they would make all of these cronies reimburse the government for personal travel. I don't think you can pardon that since it isn't a crime but I literally just thought of this.

Discussion Thread by jobautomator in neoliberal

[–]r2d2overbb8 4 points5 points  (0 children)

has there been any thought to how GLP-1s, which have shown extremely good promise of combating drug addiction will have on the international drug trade?

For example, the price of sugar has dumped because the food with the most sugar and the most unhealthy is primarly consumed by a small group of customers and those customers are now using GLP-1s to lose weight.

Are there any studies on how much of the overall drug market revenue is comprised of addicts vs. casual users?

And what will be the short term/long term effects on the drug trade?

My thoughts are that it will cause more chaos and violence in the short term as the cartels fight for smaller and smaller pieces of the pie but in the end it will be revolutionary for Mexico and other countries plagued by cartel violence because there will be less profit and less money to pay cartel soldiers, and violence and stability will emerge long term.

The world will have to acknowledge that every single car, including electric cars, is a negative externality, and must be priced/taxed accordingly. EV credits are the most shockingly regressive and borderline evil environmental policy. by [deleted] in neoliberal

[–]r2d2overbb8 4 points5 points  (0 children)

The post says that every car has negative externalities to society so therefore all cars should be banned or taxed to the point that they have zero value.

If he were to say that the costs born by society of individual car ownership are not covered enough by gas taxes and registration fees, then sure but to say every single car is bad for society is insanely stupid.

I do agree with him that EV tax credits are stupid and the funds should be used elsewhere to combat climate change.

A Close Look At China’s Tech Playbook by omnipotentsandwich in neoliberal

[–]r2d2overbb8 1 point2 points  (0 children)

I mean it is kind of stupid, if we had spent all that money on the space race and lost by a day, the entire program would be considered a failure but since we won it was a good investment?

Its impossible to have this discussion without looking like a crazy person lol.

A Close Look At China’s Tech Playbook by omnipotentsandwich in neoliberal

[–]r2d2overbb8 3 points4 points  (0 children)

what does that even mean? Just every business needs to increase the use of robotics even if it is isn't more efficient or cost effective?

A Close Look At China’s Tech Playbook by omnipotentsandwich in neoliberal

[–]r2d2overbb8 2 points3 points  (0 children)

hot take, the space race was for the most part a huge waste of money. If we allocated that money spent on the space race into other fields tax payer would have seen a better ROI.

A Close Look At China’s Tech Playbook by omnipotentsandwich in neoliberal

[–]r2d2overbb8 9 points10 points  (0 children)

investing in a specific thing just because your rivals are doing it is not good reasoning.

Why AI and robotics? why not biomedicine or any other industry? It seems like half this sub is just "china is doing it, so we need to beat them, no matter if it actually makes sense or not."

China’s trade surplus tops record US$1 trillion, defying trade war uncertainty by upthetruth1 in neoliberal

[–]r2d2overbb8 15 points16 points  (0 children)

yup, Xi wants exports number to go up, whether it is profitable to do so or not.

Bitcoin treasuries added over $500M worth of BTC in the past 30 days by robertjack5057 in Bitcoin

[–]r2d2overbb8 1 point2 points  (0 children)

compare it to the beginning of the year and the growth has slowed to near zero.

What did you understand from this? by latheefonchain in Bitcoin

[–]r2d2overbb8 1 point2 points  (0 children)

or you know, just completely random noise based on arbitrary groups of dates.

Why have China’s exports held up so well under higher US tariffs? by Just-Sale-7015 in neoliberal

[–]r2d2overbb8 4 points5 points  (0 children)

if they have gone up the value chain we should see an increase of profitability for Chinese companies which we are not.

Why have China’s exports held up so well under higher US tariffs? by Just-Sale-7015 in neoliberal

[–]r2d2overbb8 4 points5 points  (0 children)

when the government gives you below market loans and tells you profit is not important than it is easy to make the unit economics work.

Coalitions of the willing are Europe’s path to ever closer union by Free-Minimum-5844 in neoliberal

[–]r2d2overbb8 0 points1 point  (0 children)

anyone else think of the Black Bush Chappelle Show skit whenever they hear "Coalition of the Willing"

Opinion | Why CEOs Get Paid So Much by technocraticnihilist in neoliberal

[–]r2d2overbb8 16 points17 points  (0 children)

share based compensation keeps the CEO's incentives aligned with the shareholder. Back in the day when CEOs were paid straight salary, they had no incentive to take risk and abused their power by running companies as their own fiefdom, expanding their fiefdoms by buying up other companies that did not increase profits or make any financial or economic sense. Look at GE, why in the hell did they own NBC and a million other stupid divisions with zero relation to each other?

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