Saylor says buying Bitcoin-focused rivals is ‘too risky’ for Strategy

Business Intelligence firm Strategy’s executive chairman, Michael Saylor, said the company has no intention of acquiring other Bitcoin treasury firms because it could be “too risky” and distracting for management. 

Speaking during the company’s third-quarter earnings call on Thursday, Saylor told investors Strategy had “no current plans for M&A activity,” even if a potential deal might appear profitable at first.

“Generally, we don’t have any plans to pursue merger and acquisition activity, even if it would look to be potentially accretive. There’s just a lot of uncertainty, and these things tend to stretch out six to nine months or a year. An idea that looks good when you start might not still be a good idea six months later,” he reckoned.

The remarks were made during Strategy’s Q3 earnings broadcast on YouTube, where Saylor fielded questions from investors and analysts about the company’s Bitcoin strategy, and approach to capital allocation.

No plans for M&A activity, says Saylor

When asked about plans for Bitcoin treasury companies acquisitions by The Benchmark Company Equity Research Analyst Mark Palmer, Michael Saylor insisted the firm’s management was “laser-focused” on selling its existing credit instruments.

“Our management team is focused on selling the four credit instruments that we have and expanding the reach of our digital credit instruments internationally,” he said. “We’re also focused on improving the quality of our balance sheet and equitizing convertible bonds.”

He said that while some acquisitions could appear beneficial on paper, they carried unforeseen risks and could divert attention from the company’s main priorities.

“Even if something looks potentially accretive, it might not turn out that way. It can be very distracting for the management team while you’re integrating or pursuing those things.”

However, the 60-year old American entrepreneur did not entirely shut the door on the idea. 

“I don’t think we would ever say we would never, never, never, ever. But what we would say is that the plan, the strategy, the focus is to sell digital credit, improve the balance sheet, buy Bitcoin, and communicate that clearly to credit and equity investors,” he asserted.

Strategy counts profits through BTC investments

Strategy reported holding approximately 640,808 Bitcoin as of Monday, with a total acquisition cost of $47.44 billion. The firm said its holdings had a market value of $70.9 billion, based on Bitcoin’s late-October price of roughly $110,600 per coin. 

The BTC acquisitions were made at an average purchase price of $74,032 per coin and a 26% year-to-date yield, generating $12.9 billion in profits. Strategy also told investors it had achieved 116,555 BTC in gains this year, meeting most of its full-year performance targets ahead of schedule.

“We’ve done 84 acquisitions of Bitcoin and every one of them was homogeneous and transparent. You could instantly calculate whether it’s accretive or dilutive. They were generally all accretive, and our focus is to do high-speed, transparent digital transactions,” Saylor remarked.

On Monday, S&P Global Ratings assigned Strategy a “B-” credit rating and classified it as “stable” within the speculative, non-investment-grade category commonly referred to as “junk bonds,” without calculating its BTC holdings as a factor. 

Saylor: Bitcoin volatility is cooling down

Speaking on the market’s volatility in October and how it could have affected Strategy’s gains, Saylor said the company’s NAV to MNAV has been trending down over time because the Bitcoin asset class is maturing and severe market swings have reduced.

He attributed this trend partly to the success of heavy institutional Bitcoin inflows and the expansion of derivatives markets. 

“The volatility is decreasing because of the growth of companies like ours, the maturation of the Bitcoin treasury industry, and the success of IBIT … The onshore derivatives market has grown from $10 billion to $50 billion. People are using those derivatives to reduce volatility, and that’s very good for the asset class and very good for the industry,” he explained.

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