Why Did Bill Miller and His Son Buy MicroStrategy Debt? It’s the Bitcoin

Taking part in MicroStrategy’s recent $650 million convertible senior note offering was basically getting an almost-free call option on bitcoin, Bill Miller IV, the son of legendary investor, said.

• Miller and his dad co-manage the Income Strategy fund for Miller Value Partners, which is headed by the senior Miller, a noted bitcoin bull.
• In a Jan. 21 letter to investors, the younger Miller explained what bitcoin is and defended it against common criticisms.
• "Bitcoin has been the best-performing asset over eight of the past 10 calendar years, and its annualized performance has blown away the next-best performer, the Nasdaq, by a factor of 10 over the past decade," Miller said. "Not owning any bitcoin has been a massive mistake, and we expect that will continue to be true." 
• Miller then noted the offering resulted in the only debt the business intelligence firm carries and the amount is half what Miller thinks the company's worth.
• MicroStrategy, which used the proceeds of the offering to buy more bitcoin, now owns more than $2 billion in the largest cryptocurrency.
• "So, when MicroStrategy issued the bond at par, in our assessment there was very little downside and an almost-free call option on Bitcoin," Miller wrote.
• Miller also praised MicroStrategy head and bitcoin evangelist Michael Saylor's "almost unique ability" to catch and scale trends early while portraying his uneven tenure as CEO as an asset, saying, "He is the only sitting CEO we can find that has thrived after presiding over a 99.86% decline in his company’s equity price."

CORRECTION (Jan. 24, 20:41 UTC): Corrects to note that it was the younger Miller who spoke about the fund’s purchase, not his father.