Jim Chanos has missed out on a stunning 85% annualized return on his portfolio after he covered his short sale of Strategy (formerly MicroStrategy) and sold the bitcoin (BTC) that hedged it.
Since 2024, he has profited from the deteriorating premium of MSTR stock to its BTC holdings, likely doubling his money in about 12 months.
However, after he closed on November 7, both legs of that pair trade proceeded immediately to extend their gains another 3.3% within two weeks — a foregone, annualized return of 85%.
On November 7, the price per share of MSTR as of the 9:30am New York open was $222.66. Yesterday, MSTR closed 20.4% lower at $177.13.
Over the same time period, BTC declined 13.8%.
The spread between those two changes would have netted Chanos 20.4% on half his portfolio (i.e. 10.2% on the entirety) and -13.8% on half his portfolio (i.e. -6.9% on the entirety), contributing 3.3% in sum.
Though a relatively modest figure, 3.3% is actually an enviable return for a sophisticated money manager across a hedged, pair trade.
Chanos might have doubled his money in a year, but he unfortunately missed out on another 85% annualized return that he could have enjoyed had he held on for just two more weeks.
Read more: How Jim Chanos outplayed Michael Saylor: short MSTR, long BTC
Jim Chanos kicking himself for covering MSTR too early
Simply holding his entire portfolio short MSTR for an extra two weeks would have earned Chanos an extra 20.4%, which would have annualized to a stunning 530%.
However, he’s never expressed a directional call on MSTR on an absolute, USD basis. Instead, he simply bet his money on MSTR losing most of its BTC premium.
The basic multiple-to-Net Asset Value or mNAV of MSTR has declined from over 3.2x in November 2024 to less than 1x today.
Nowadays, the market capitalization of Michael Saylor’s BTC treasury company is a mere 0.91x the value of the company’s treasury.
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