According to the “Big Short” form from investment research firm Fintel, as of June 6, MicroStrategy has 18 short positions with a total value of up to $6.9 billion. The form is compiled based on information disclosed by institutions to the U.S. Securities and Exchange Commission (SEC), revealing the institutions’ largest short positions. The largest short position listed in the form is approximately $2.4 billion, ranking 27th in the overall form.
While some investment institutions predicted that the stock price of MicroStrategy would fall and invested accordingly, confidence in this prediction is actually decreasing. This can be seen from the significant decrease in the stock’s “short interest ratio”.
The short interest ratio refers to the average holding period of short positions, which has dropped from 3.1 days to 1.5 days over the past six months. This indicates that investors shorting the stock are holding it for a shorter period of time, showing that their expectation of further price declines is no longer as firm.
Although the form does not specifically disclose the names of the shorting institutions, some institutions have publicly stated their intention to short MicroStrategy. According to previous reports by Zombit, Kerrisdale Capital, a shorting institution, stated in March of this year that MicroStrategy’s stock was overvalued and the company currently holds short positions in MicroStrategy, while also holding long positions in Bitcoin spot ETFs from BlackRock and Fidelity to hedge against upside risks.
Kerrisdale Capital’s logic is that with several Bitcoin spot ETFs approved this year, investors have almost no reason to gain Bitcoin exposure through trading MicroStrategy stock.
Furthermore, during the period of Bitcoin price increase, the speed at which MicroStrategy’s stock price rose was much higher than that of Bitcoin, leading to a premium of MicroStrategy relative to Bitcoin. This attracted many institutions to begin trading this “MicroStrategy stock (MSTR) and Bitcoin price difference”.