More on Financial Stocks Main Street Capital: Continues To Outperform Peer BDCs But Is Expensive (Downgrade) B. Riley: Odds of Surviving 2025 Are Deteriorating With Reputational Failure AccuWeather updates California wildfire damage estimate to $135B-$150B Block to change ticker symbol to 'XYZ' Agree Realty guides for $1.1B-$1.3B of investment volume in 2025

2025-01-11 17:10

Summary MARA Holdings has aggressively bought Bitcoin, raising over $2.1 billion through zero-interest convertible notes, significantly increasing its BTC-backing per share. The company mined 2,514 BTC in Q4-24, with potential annualized revenue of $1 billion at a $100k BTC price. MARA's high short interest and reliance on Bitcoin price increase create a potential short squeeze setup should BTC's price generate a new high. While MARA's strategy mimics MicroStrategy's, its success likely hinges on perpetual Bitcoin appreciation and investor appetite for share price volatility. In the three months since my prior Seeking Alpha article covering MARA Holdings ( MARA ) was published at just under $18 per share, the company has seen the stock price explode up near $30 and fall back down under $18 again - all while it has closed two separate rounds of convertible senior notes at zero percent. Far from the only company jumping on the bandwagon, MARA has been on a Bitcoin ( BTC-USD ) buying spree reminiscent of what we've seen from Michael Saylor and MicroStrategy ( MSTR ) in recent months. In this update, we'll look at MARA's aggressive Bitcoin buying in Q4-24, the company's mining production, and the seemingly increasing potential for a short squeeze in MARA shares. The Saylor Way MicroStrategy co-founder and Executive Chairman Michael Saylor has created a monster. Borrowing dollars at low or even zero-interest to buy an asset that has generally appreciated in nominal dollars during its 16-year existence is just one part of the game. The real product that has made MSTR's moonshot such an interesting story is that the company is basically selling large investors price volatility in its common stock shares. So far, it has created a feedback loop that is equal parts fascinating and potentially dangerous, from where I sit. Zero-interest or not, levering up to buy an asset that can fall in price by as much as 10% in a matter of just a few minutes is a bold treasury strategy and that is likely even more true for a Bitcoin miner like MARA. The underlying business that MARA has operated since I've been covering the stock is Bitcoin mining. I doubt I need to explain this, but typically miners are in the business of selling Bitcoin to cover things like operating costs, capex, and SG&A. In a theoretically efficient operation, miners should be able to pay all-in costs with mined coins and still have some production left over to 'stack sats' for long term shareholder value and for funding growth. Bitcoin Treasury Additions 2024 Mined 9,457 Purchased 22,065 Total 31,522 Source: MARA Holdings In practice, growth and operations have generally been funded through capital raises and shareholder dilution. The economics of mining are so challenging long term, that we've even seen mining companies shift to buying Bitcoin in addition to the coins that they mine. MARA bought more than twice as many Bitcoins as it mined in 2024 and most of those purchases came in the last several weeks of the year with roughly 15k BTC bought between late November and the end of the year: MARA Holdings BTC Stack (BitcoinTreasuries) As mentioned earlier, the funding from those purchases has come through convertible note offerings. Going back to the summer, MARA has closed three such offerings: Convertible Notes Rate Maturity Raised August 2024 2.125% 2031 $300 million November 2024 0% 2030 $1 billion December 2024 0% 2031 $850 million Source: MARA Holdings Over the course of just four months, MARA Holdings has raised over $2.1 billion through convertible notes. On paper, this has been highly beneficial to shareholders when judging purely by the Bitcoin-backing of the company's shares: MARA Sats Per Share (MARA, Author's Calculations) At the end of December, MARA's 339.4 million common shares were supported by just under 44.9k BTC. The math on that is 13,227 'sats per share' backing MARA shares. This is the largest sat-backing MARA shares have had in at least the last three years. Even when adjusting for the company's assumed dilution through convertible notes, the BTC-backing per share has increased year over year. MARA Holdings 12/31/2023 9/30/2024 12/31/2024 Bitcoin Holdings 15,174 26,747 44,893 Assumed FD Shares Outstanding (000s) 254,888 341,932 463,400 BTC per 1,000 Shares 0.0595 0.0782 0.0969 Source: MARA Holdings, Author's Calculation Using the assumed fully diluted shares outstanding, there is 0.0969 BTC per FD MARA share - dubbed the 62.7% 'BTC yield.' This gives MARA a $9.20 fully diluted share value in Bitcoin alone at $95k BTC. At the non-diluted 339.4 million shares outstanding figure, MARA's 13,227 sats/share give MARA shares a $12.53 BTC-backing currently. Which could be interpreted as the market assigning just a $5.33 per share valuation to the company's actual mining business if one assumes the BTC purchased through convertibles won't have to be liquidated to meet the company's obligations. Q4 Production During the month of December, MARA mined 890 BTC on an energized hash rate of 53.2 EH/s. That final month take gave MARA 2,514 BTC mined during the quarter: Monthly Production (MARA, Author's Chart) For the three month period, MARA mined an average of 838 BTC per month. At a $100k BTC price, MARA averaged slightly over $1 billion in annualized revenue from mining BTC. Though the ceiling for this company may be much higher. For instance, if we take the view that BTC will hit $200k this cycle, MARA's Q4 mine production implies an annualized revenue rate of $2 billion. That puts the current price of MARA at just 3x forward sales. And again, the share value backing of MARA through just its Bitcoin holdings would put a floor bid under MARA of roughly $25 at that Bitcoin valuation - a nearly 40% premium over current shares. To be clear, this is just guessing. I'm not even sure BTC will get to $200k per coin. But it may not even have to given the potential squeeze dynamics in MARA shares if BTC simply breaks out to a new high. Short Squeeze Setup? Of the top 5 US-listed Bitcoin mining equities, no company has a higher percentage of shares outstanding sold short than MARA Holdings: Data by YCharts At 23%, the only mining company that even comes close to this metric is CleanSpark ( CLSK ). How does this short interest compare with MSTR? Data by YCharts Consider that MARA and MSTR have had a fairly close correlation in percent of shares outstanding sold short going back to 2021. That changed in 2024 with MARA heading higher and MSTR's short percent dropping. Now, MARA Holdings is utilizing the MSTR Treasury management strategy. Will it have the same impact on those betting against the stock? Time will tell. Risks The obvious risk to me is MARA has made itself even more reliant on the success of Bitcoin than it already was. Unlike MicroStrategy, which operates a separate software business, MARA's core business is exposed to Bitcoin prices - giving the company's stock price no real insulation should the price of BTC go down. And the economics of that business are dubious long term. Mining is capital intensive and MARA's estimated break-even price is higher than current Bitcoin levels. Furthermore, miners buying BTC to add to Treasury stacks is not a new concept. Bitfarms ( BITF ) did something similar shortly after the market top in November 2021. Following the collapse of Terra in May 2022, Bitfarms quickly sold down its BTC Treasury stack from over 6,000 BTC in May down to about 400 by December. The company's share price ended 2022 96% off its stock price high from November 2021. Likewise, borrowing to maximize returns from what may feel like a winning strategy has been seen before as well. Back before it was converted to a spot ETF, 3AC used debt to play the Grayscale Bitcoin Trust ETF ( GBTC ) NAV rate arbitrage and went bust when the NAV rate went deeply negative. The point is, there are no sure things. Closing Summary For Bitcoiners, it's hard to argue with MARA implementing the MicroStrategy ' infinite money ' strategy. MARA has essentially given itself a floor price through its Bitcoin holdings and was able to raise nearly $2 billion through zero interest convertibles. If you believe Bitcoin will continue to appreciate in price, taking a shot on MARA might not be that bad of a bet, in my opinion. But this is all reliant on the price of Bitcoin increasing essentially in perpetuity and investors' willingness to buy share price volatility through convertible notes. I'm not sure either can continue forever. But for now, I think it's a tough trade to fade.

2025-01-11 12:05

Summary Metaplanet Inc. is a Japanese company that has gone all-in on the Michael Saylor Bitcoin playbook. Recently trading on the U.S. OTCQX market, the Company does not have a long track record and its shares are thinly traded in the U.S. Until the company differentiates itself from its competitors, U.S. investors are better off investing in one of the U.S. domiciled Bitcoin holding companies. Tokyo-based Metaplanet Inc. ( OTC:MTPLF ) (the " Company ") is a Japanese investment firm following the Michael Saylor /MicroStrategy ( MSTR ) Bitcoin ( BTC-USD ) (" Bitcoin ") playbook (as describe herein, the " Saylor Playbook "). Originally a firm with diverse business interests, the firm has scrapped its prior business model and shifted its focus to Bitcoin. The " Our History" section of the Company's website discusses the shift: Metaplanet boasts over a decade of diversified business engagement. With deep roots in Japan, our dynamic team comprises seasoned professionals with expertise in finance, trading, real estate, and Bitcoin. In response to the pandemic-induced investment landscape, Metaplanet comprehensively restructured its diverse assets and businesses, paving the way for a strategic pivot towards a Bitcoin-centric vision." Moreover, the Company is clearly all-in when it comes to Bitcoin, including a literal manifesto on its website. The manifesto states that: Metaplanet Inc., a publicly traded company listed on the Tokyo Stock Exchange (3350), has embarked on a strategic transformation. By leveraging Bitcoin as its principal treasury reserve asset, Metaplanet will utilize excess cash flow and implement accretive corporate governance, including financial management strategies such as debt and equity financing, to further its Bitcoin accumulation. This strategic pivot is driven by Bitcoin’s unique attributes, including its absolute scarcity and apolitical monetary policy." As reconstituted, the Company's core business segments are 1) Bitcoin investment, 2) Bitcoin Consulting, and 3) Real Estate. I will briefly discuss each of these business segments below in reverse order. Real Estate : With respect to its real estate portfolio, it appears to primarily consist of interests in hotels, including The Royal Oak Gotanda , a hotel located in the heart of Tokyo. In 2024, per a December 18, 2024 Earnings Forecast disclosure (the " Forecast Disclosure "), the Company advised that the hotel business performed well in 2024 with high occupancy and room rates. Specifically, for 2024, the Company has projected revenue of 370 million yen and operating profit of 135 million yen . Consulting : The Bitcoin consulting segment assists other businesses in adopting Bitcoin as a treasury reserve asset, including related services. As far as I can tell, revenue from this segment is currently de minimis . Bitcoin Investment : The goal of the Company's Bitcoin Investment segment is "to enhance shareholder value through strategic, perpetual Bitcoin accumulation, aligned with a proven long-term, value-accretive vision. Through this approach, Metaplanet is able to develop business verticals that align with the overarching mission of adopting a corporate Bitcoin standard." The investment strategy involves financial engineering, including "equity financing considerations and long-dated fiat currency market arbitrage, all executed within a Bitcoin-centric framework." According to management, the strategy is currently working, even when unrealized appreciation in the price of its Bitcoin holdings is removed from the equation. For example, per the Forecast Disclosure: [I]ncome from selling Bitcoin put options, introduced during the current fiscal year [2024], is expected to generate 520 million yen in revenue. Combined with the strong performance of the hotel business, even though the SG&A expenses were expected to be about 385 million yen, the company is on track to record consolidated operating profit for the first time since FY2017." Additionally, in the fourth quarter of 2024, the firm has announced a new initiative : The initiative seeks to leverage “long-term debt and periodic equity issuances to continually accumulate Bitcoin as an alternative to holding a weakening yen. This also includes tapping convertible bonds and other financial instruments to stack even more satoshis." As of December 23, 2024, per its Notice-of-Additional-Purchase-of-Bitcoin (the " Purchase Disclosure "), the Company held 1,761.98 Bitcoin. At the time of writing, this translates into roughly $175 million worth of Bitcoin (assuming a Bitcoin price of $99,000). This compares to 141 Bitcoin held by the Company on June 30, 2024 and 399 Bitcoin held by the Company on September 30, 2024. The Company has clearly accelerated its acquisition of Bitcoin over the past few months. Bitcoin Yield Following MicroStrategy's lead, the Company utilizes the key performance indicator (" KPI ") of bitcoin yield (" BTC Yield "). BTC Yield is a measure of the percentage change from one period to the next of the ratio of the Company's Bitcoin holdings and its assumed diluted shares outstanding (including potential shares from raising equity and convertible debt). The Company uses this KPI to assess the performance of its Bitcoin investment strategy. If successful, the strategy is accretive to shareholders in Bitcoin terms (e.g., each share of the Company represents a higher fraction of Bitcoin). In the second half of 2024 the strategy has been successful, as noted in the Company's recent Purchase Disclosure: The firm highlights that its newly implemented BTC Yield, a key performance indicator ((KPI)), is up from 41.7% between July and September 2024 to 309.82% between Oct. 1 and Dec. 23." Of course, as a shareholder of the Company, an increasing BTC Yield is great so long as the price of Bitcoin continues to rise, in which case the high BTC Yield demonstrates management's ability to leverage equity and debt financing. If the Bitcoin price were to fall by 50% or more in the next downturn (not unrealistic based on past history, in which case the Company is like to fall by even more), then the additional Bitcoin accreting to shareholders will be of less value since no one wants to own more of a depreciating asset. [Of course, true believers in Bitcoin will simply ride the storm, believing that the asset will recover quickly and soar to greater heights in the future.] New Initiatives While the Company is clearly following the Saylor Playbook, I give it credit insofar as management is really trying to move the needle to advance Bitcoin. For example, the Company is launching a magazine , Bitcoin Magazine Japan, and rolling out some Bitcoin benefit options for shareholders, among other plans. Balance Sheet Operating as a foreign issuer, the Company is not subject to the same disclosure laws as public companies domiciled in the United States. A summary of the most recent balance sheet for the period ending September 30, 2024 is shown below. (Thousands of Yen) December 31, 2023 September 30, 2024 Cash & Deposits 553,175 1,966,394 Total Current Assets 599,412 2,146,987 Bitcoin Assets -- 4,507,081 Total Non-Current Assets 1,066,725 5,629,873 Total Assets 1,666,137 7,819,250 Total Current Liabilities 378,125 2,413,501 Long Term Borrowing 130,501 135,515 Total Non-Current Liabilities 135,924 143,451 Total Liabilities 514,049 2,556,953 Shareholder Equity 1,152,087 5,262,297 The Company's current ratio declined from 1.58 at 2023 year end to 0.89 for the quarter ended September 30, 2024. This is indicative of greater short-term leverage, and not a positive factor in my few. Moreover, while the total assets to total liabilities ratio was 3.06 on September 30, 2024, that ratio declined compared to total assets exceeding total liabilities of 3.24 on December 31, 2023. This suggests to me that management is adding risks that might not be fully appreciated by investors. Other risks of owning shares in the Company are analyzed below. Analysis of Certain Risks 1) A long-term investor should consider whether they should simply acquire Bitcoin directly rather than investing in a Bitcoin holding company like Metaplanet Inc. Investing in the Company requires confidence in management's ability to engage in successful financial engineering transactions. Such analysis of management competence is unnecessary when an investor simply buys Bitcoin directly. Moreover, management might put its own interests ahead of the interests of shareholders. Buying Bitcoin directly avoids such risk. 2) Bitcoin is a high beta investment. Investing in leveraged Bitcoin holding companies like the Company will only amplify the volatile ride, which many investors may not be equipped to manage successfully. 3) For the quarter ended September 30, 2024, per the Forecast Disclosure linked above, the majority of the Company's revenue (520 million yen ) came from its exercise of certain Bitcoin put option strategies, giving the Company a hedge fund vibe versus being an actual operating company. 4) The Company's operations utilize the Japanese yen , which has declined materially over the last five years. The chart below shows the performance of the yen via the Invesco CurrencyShares® Japanese Yen Trust ETF ( FXY ) and the US Dollar Index ( DXY ). Seeking Alpha Needless to say, ownership of the Company includes material foreign currency risk associated with the yen . 5) While the Company started trading on the U.S. OTCQX market on December 19, 2024 , it is ultimately hard to see how the Company, as a foreign issuer with yen exposure and a limited track record, will differentiate itself to U.S. investors in the near term. Investors can buy Bitcoin directly or they can buy a U.S. domiciled Bitcoin holding company like MicroStrategy, which, notably, is now included in the Nasdaq 100 index and the beneficiary of passive flows and high trading volumes. The Company on the other hand has very low trading volume in the U.S. (e.g., per Seeking Alpha , less than 500 shares exchanged hands on January 8, 2025). Conclusion Based on the foregoing analysis, I see no reason for U.S. investors to acquire shares of the Company at this time. I'll check back in on the Company later in the year to see if the story has changed. For now, I am staying on the sidelines. Of course, do your own due diligence.

2025-01-11 11:32

Summary YieldMax Bitcoin Option Income Strategy ETF has underperformed compared to its peers and a simple profit-taking strategy in Bitcoin spot ETFs since its inception. YBIT's synthetic covered call strategy limits upside potential, resulting in flat returns since it launched despite Bitcoin's significant gains. YBIT has also lagged behind more traditional income products like T-bills and corporate bonds, questioning its viability as an income investment. Given its performance, I see no compelling reason to choose YBIT over alternative investment options for income or Bitcoin exposure. After providing Seeking Alpha readers with my favorite way to play the Bitcoin ( BTC-USD ) rise to $100,000 per coin back in early-November, the long-awaited psychological six-figure number has come and gone not once, but twice. More recently, through coverage of the Grayscale Bitcoin Trust ETF ( GBTC ) and the Bitwise Bitcoin ETF ( BITB ), I've explored how close we might be to a price top for this cycle and the recent trends in network scaling and development . My current view is that Bitcoin's 2024 halving epoch has yet to reach its price climax. Today, we're going to take a different angle on Bitcoin's potential rise to new highs in 2025; how to not play that move. YieldMax Bitcoin Option Income Strategy YieldMax products have become increasingly more popular in recent years, specifically with investors who want 'high-yielding' income products. I've explored several of these products in the past and I think it would be accurate to call my coverage of these types of funds somewhat polarizing. Some of the critiques of my YieldMax fund analysis have been fair and other critiques much less so, from where I sit. In my initial coverage of the YieldMax Bitcoin Option Income Strategy ETF ( YBIT ) we'll assess whether or not the fund fails against three different strategies. First, the fund details: Inception: 4//22/24 Expense Ratio: 0.99% AUM: $110 million 30 Day SEC Yield: 1.92% Rather than simply buying and holding Bitcoin, the YieldMax Bitcoin Option Income Strategy ETF utilizes a synthetic covered call strategy to produce income for shareholders as a primary objective. The secondary objective of the fund is to offer exposure to the share price gains from the Bitcoin investment products that the fund trades through the aforementioned options. Though it should be noted that upside is limited due to the nature of the covered call strategy. Data by YCharts The fund does indeed pay out large monthly dividends to shareholders. The question is whether or not the total return to shareholders justifies investment. Performance Against BTC Income Peers YieldMax is not the only fund that aims to provide investors income from Bitcoin options strategies. Other such funds include the Simplify Bitcoin Strategy PLUS Income ETF ( MAXI ), the NEOS Bitcoin High Income ETF ( BTCI ), and the Roundhill Bitcoin Covered Call Strategy ETF ( YBTC ). Of these funds, YBIT is among the newest having less than a year in the market: Fund Details YBIT MAXI BTCI YBTC Inception 04/22/2024 09/29/2022 10/16/2024 01/17/2024 Expense Ratio 0.99% 6.10% 0.98% 0.95% AUM $110.17M $56.92M $49.00M $93.89M Source: Seeking Alpha One clear standout from this table is the enormous expense ratio from MAXI. As far as I can tell, this is due to that fund having a far more complex strategy than the other three products. Given such a large management fee, one might reasonably expect YBIT to outperform MAXI over time. So far, that has simply not been the case: Total Return (Seeking Alpha) Since inception, YBIT investors are flat while each of the competing high-yield Bitcoin options ETFs have generated more than a 20% total return. Not only has YBIT under-performed against MAXI since YBIT's April inception, but it has also failed to keep up with BTCI and more recently with YBTC. And again, this is showing total return, not price performance. Anyone who bought YBIT the day it was launched has essentially broken even, in spite of Bitcoin returning over 38% over the same time period. Of course, not every YBIT shareholder bought the fund the day it launched. Even for savvy investors who opportunistically bought the early-September price low, the fund has under-performed: Data by YCharts Comparing YieldMax funds to the underlying assets used in the options strategy has been a point of some contention. The chart above shows that YBIT has under-performed both Bitcoin and MAXI - the latter of which is a fund that figures to be competing with YBIT for the same type of investor. Here's an important question that I would challenge fans of these instruments to consider; if nailing bottoms in the price of the underlying asset is such an important determining factor in generating a total return that will still ultimately lag the underlying asset, what is the point of buying the income instrument? Performance Against A Simple Profit-Taking Strategy In the comments section of my last YieldMax article, Jamie Ellis had what I felt to be the most fair critique of my analysis. He and I seem to have an agreement on the very real draw-down risk of funds like YBIT. In that critique, he raised a very interesting point about how these funds compare to profit-taking strategies in the underlying assets. For instance, we know how YBIT has performed since its inception and more recently since Bitcoin's September lows. What is less obvious is whether or not YBIT total returns have outperformed a basic profit-taking strategy in a similarly weighted iShares Bitcoin ETF ( IBIT ) position. The table below assumes an initial investment of $100,000 in YBIT shares at the closing price of $20.45 on April 23rd, 2024 for 4,890 shares. Our YBIT share count remains consistent, but in the far right column I'm showing the month end total value of the investment of those 4,890 shares with the cumulative dividend payouts from each month. YBIT Month End Closing Share Price Position Value YBIT Payout Share Value + Cumulative Payouts April $18.55 $90,709 $0 $90,709 May $20.57 $100,587 $0 $100,587 June $17.01 $83,178 $6,703 $89,881 July $16.28 $79,609 $5,948 $92,260 August $13.80 $67,482 $3,279 $83,411 September $13.78 $67,384 $3,529 $86,842 October $12.25 $59,902 $7,185 $86,545 November $13.85 $67,726 $6,183 $100,552 December $12.37 $60,489 $3,466 $96,781 Source: YieldMax, Seeking Alpha, Author's Calculations Simply taking the distributions from holding YBIT would have resulted in a small investment loss at the end of 2024 with share value and cumulative payouts totaling under $97,000 - below the initial $100,000 investment in April. And this is before any potential taxes on distributions. How would investors have performed if they instead bought $100,000 in IBIT and reduced their positions by 3% each month on the day of YBIT's ex-dividend date? In the table below, we're assuming 2,638 shares of IBIT purchased at $37.90 in April. YBIT Ex-Div Date IBIT Share Close IBIT Share Value at Ex-Date 3% IBIT Reduction New Share Count 6/6/24 $40.16 $105,963 $3,179 2559 7/5/24 $32.20 $82,412 $2,549 2480 8/7/24 $31.19 $77,358 $2,321 2406 9/6/24 $30.41 $73,161 $2,195 2334 10/3/24 $34.72 $81,024 $2,431 2264 10/31/24 $39.78 $90,047 $2,701 2196 11/29/27 $55.21 $121,225 $3,637 2130 12/27/24 $53.68 $114,330 $3,430 2066 Source: YieldMax, Seeking Alpha, Author's Calculations At the end of December, the remaining 2,066 shares of IBIT had a market value of over $109k dollars. This is in addition to the $22.4k in cumulative sales from our 3% reductions on YBIT's ex-divi dates. Even if we get more aggressive and reduce IBIT positions by 6% on YBIT ex-dividend days, we still get a better total return in the IBIT position: YBIT Ex-Div Date IBIT Share Close IBIT Share Value at Ex-Date 6% IBIT Reduction New Share Count 6/6/24 $40.16 $105,963 $6,358 2480 7/5/24 $32.20 $79,863 $5,098 2322 8/7/24 $31.19 $72,420 $4,345 2183 9/6/24 $30.41 $66,372 $3,982 2052 10/3/24 $34.72 $71,233 $4,274 1929 10/31/24 $39.78 $76,717 $4,603 1813 11/29/27 $55.21 $100,086 $6,005 1704 12/27/24 $53.68 $91,473 $5,488 1602 Source: YieldMax, Seeking Alpha, Author's Calculations The 1,602 remaining shares at the end of December have a valuation of $85k, and we've locked in over $40k in realized sales. I must stress that we're not re-investing the dividends from YBIT in this exercise. Doing so would defeat the purpose of comparing YBIT distributions to a profit-taking strategy in a spot ETF. Furthermore, if an investor was actually utilizing the dividend payments from YBIT as a genuine form of income, we shouldn't expect reinvestment anyway, in my estimation. To be fair to YBIT, trading and dividend history for this fund are limited since it is less than a year old. Additionally, most investors likely did not purchase YBIT on launch day. Some have perhaps been lucky enough to buy the lows. While we don't have the amount of data we'd likely want to draw a definitive conclusion on this, so far it has clearly made more sense to take off chunks in IBIT for income rather than holding YBIT since inception, dollars being equal. Especially if one is holding these products in a tax-advantaged account. Performance Against More Traditional 'Income' Now that we can see YBIT has under-performed against both similar products from peers and a simple profit-taking strategy through a spot ETF, we can add a third method for good measure; YBIT vs more traditional income products. To be clear, I've long-held the view that calling YieldMax products 'income investments' is generous. Rather, my view has been that these are raw speculative investments masquerading as income products. But, if we wish to consider a fund that has broken even after eight and half months of market performance to an 'income product,' let's compare YBIT to T-bills and corporate bonds: Data by YCharts The chart above shows the performance of YBIT against the WisdomTree Floating Rate Treasury Fund ( USFR ) and the iShares iBoxx $ High Yield Corporate Bond ETF ( HYG ). YBIT Holdings as of 1/10/25 (YieldMax) Despite more than half of the YBIT NAV currently sitting in government debt, I happen to think HYG is the far better comp here because the market price of the fund has far more fluctuation on a day-to-day basis than that of USFR. Regardless, YBIT has under-performed both corporate bonds and short term T-bills since its April inception from a total return standpoint. Closing Summary No matter which barometer you choose, YBIT has not been a lucrative investment product. I'll offer some self-reflection; I think one of the mistakes I've made in covering YieldMax products in the past is that I've come off as telling people what to do or what to think. That is not my intention. I'm just sharing what I do and how I think. Readers seemed particularly triggered by my statement that the YieldMax COIN Option Income Strategy ETF ( CONY ) was "not suitable for income investors." Surely, that's my opinion and other investors may feel differently. But I can't imagine income investors want their high-income investments to occasionally sniff 30% total losses within 5 months of purchase. That is the risk in funds like YBIT. The fund loses against more traditional income funds. It loses against other Bitcoin options income funds. And it loses against a scheduled profit taking strategy from longing Bitcoin through spot ETFs. I'm failing to see a good reason to long YBIT over alternatives.

2025-01-11 05:58