(Bloomberg) -- Long Bitcoin, short shares of MicroStrategy Inc. 

MicroStrategy shares tumbled as much as 14% Thursday after Kerrisdale Capital Management LLC said that’s the trade it has put on as the sizzling run-up in the stock, long considered a Bitcoin proxy, has far outpaced the surge in the digital asset. Bitcoin traded back above $71,000 Thursday, up about 3.5%.

“None of the reasons commonly provided for MicroStrategy’s relative attractiveness justify paying well over double for the same coin,” Kerrisdale wrote in a note. “MicroStrategy’s trading history and basic common sense suggests the current inflated premium will contract, much as it has on prior occasions, providing a compelling opportunity for a pair trade.”

MicroStrategy did not respond to a Bloomberg News request for comment. 

Read more: MicroStrategy Is Worth More Than Almost Half of S&P 500 Stocks

MicroStrategy has been lauded by investors as a proxy for the cryptocurrency because of its strategy of holding the asset as a store of value. This year, MicroStrategy has repeatedly used debt to buy more Bitcoin, helping to bolster the premium its stock trades at to the asset.

But, that premium is too high, according to Kerrisdale, especially because investors can now more easily invest in Bitcoin directly through brokerages, exchanges and new spot exchange-traded funds. These investment vehicles have all eroded MicroStrategy’s position as a unique way to gain Bitcoin exposure. 

Shares of MicroStrategy have been on a tear this year, up more than 200% alongside a record rally in Bitcoin. Even with those gains, investors have seen first-hand how the premium to Bitcoin can help on the upside but also weigh on shares on the downside. 

Read more: MicroStrategy’s Plunge Shows Risk of Stock as Bitcoin Proxy (1)

“Leverage cuts both ways and while MicroStrategy has succeeded in increasing the amount of Bitcoin held, the impact of massive dilution has also kept the amount of Bitcoin per share virtually unchanged in recent years,” Kerrisdale said. “Shareholder value creation has been overwhelmingly driven by simple Bitcoin price appreciation – much as it would from owning Bitcoin outright.”

Betting against MicroStrategy has not been a profitable trade for short sellers, who have amassed paper losses this year of more than $4 billion, according to data from S3 Partners LLC. 

(Updates stock moves throughout)

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