Positioning Watch – The Herd Behavior Strikes Back!
Hello everyone, and welcome back to our weekly positioning watch.
MicroStrategy is firmly in focus after the recent frenzy around the stock went completely bananas. While it is a semi-levered bet on BTC, it has been pumped far beyond its fair value (relative to the BTC it holds). We got the first clues yesterday that something was off in this rally.
The turnover/traded value in MicroStrategy exceeded that of SPY in yesterday’s session, which is outrageous considering SPY’s AUM is $600 billion compared to MicroStrategy’s $100 billion market cap. This implies yesterday’s traded volume equaled roughly one-third of MicroStrategy’s total market cap.
We remain fairly bullish on risk assets overall, but MicroStrategy has clearly become a positioning trade. This is peak herd behavior!
Chart 1: Hard to like MicroStrategy at this point
Everyone and their mothers are long equities, and we would need a substantial trigger to truly reverse momentum at these levels. Where are the cluster risks after the positioning normalization that followed the Trump victory, and what should you look out for as we approach year-end?
0 Comments