“Probably a German bank”: this old joke among financiers often comes up when we look for who, among institutional investors, could have been gullible enough to acquire this or that rotten financial product.
The joke dates back to the subprime era, when it was discovered with astonishment that a number of German regional banks were full of damaged debt securities that had been sold to them with abandon by their North American counterparts, no doubt too happy to have found Europe of the counterparts so good pasta.
Is history an eternal beginning? Perhaps not in such dramatic proportions, but it was nonetheless with curiosity that our analysts discovered this weekend that the German insurer Allianz is the main buyer — a quarter of the issue — of the latest convertibles at 0 % issued by MicroStrategy.
We have already discussed the MicroStrategy case in detail, notably in this section a few months ago with MicroStrategy Incorporated: Good and bad side of the trade and last week and last week with MicroStrategy, the company which outperforms Nvidia (sic).
The author puts her foot down and warns that the affair is a formal Ponzi. This is what is said. Because MicroStrategy, remember, raises free capital; reorients it towards a highly speculative asset which produces no return, thus artificially increasing its price in the process; while in the meantime, the main architect of this maneuver – the president of MicroStrategy Michael Saylor – is selling as he breathes the securities he holds in the company.
Why would the person concerned lose his way? MicroStrategy owns 331,200 bitcoins, or $31 billion in asset value at the latest price of the “cryptocurrency”. Minus the $4 billion in debt, the value of the company's equity, likely to melt in a few days if bitcoin tanked, therefore reached $27 billion, against a market capitalization of $85 billion currently.
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