Money Stuff: The Podcast – Episode Summary

Title: Smack-ish: MSTR, PE, MFT
Host/Authors: Matt Levine & Katie Greifeld
Release Date: June 13, 2025

Introduction

In the episode titled "Smack-ish: MSTR, PE, MFT," Matt Levine and Katie Greifeld delve into a contentious debate within the financial industry. The discussion primarily revolves around Jim Chanos's short thesis on MicroStrategy (MSTR), the evolving landscape of private equity (PE) hiring, and the intriguing developments at Tower Research Capital in the realm of high-frequency trading.

Jim Chanos's Short Thesis on MicroStrategy (MSTR)

The episode opens with Katie referencing a Bloomberg News article highlighting Jim Chanos's skepticism towards Michael Saylor's strategy at MicroStrategy. Chanos posits that shorting MicroStrategy's stock is a viable strategy since Saylor's company trades at a significant premium to its Bitcoin holdings.

• Katie Greifeld (04:09): "Jim Chanos has a short thesis when it comes to Michael Saylor's strategy. The idea being that you basically short strategy and you buy bitcoin because strategy trades at a premium to its actual bitcoin holdings."

• Matt Levine (04:33): "Microstrategy is kind of like fundamental business model is like, wow, stock trades at two times the value of the underlying bitcoin. So we're going to sell a ton of stock and use the money to buy bitcoin."

However, Matt brings an important nuance to the table, noting that MicroStrategy itself engages in a similar trade by selling their own stock to purchase Bitcoin, but with certain advantages Chanos doesn't have, such as not needing to borrow stock or face a short squeeze.

• Matt Levine (06:21): "He was like, no, Nobody should sell MicroStrategy stock to buy bitcoin. That's a crazy thing to do. Why would anyone sell MicroStrategy stock to buy bitcoin? Yeah, except for him."

Katie counters Chanos's position by critiquing Saylor's defense of his strategy as "financial gibberish," emphasizing that Chanos acknowledges the flaws yet Saylor continues unabated.

• Katie Greifeld (05:53): "Mr. Saylor wants you to value his business based not only on the net value of his bitcoin holdings but additionally with a multiple on the change in that nav, exclamation point."

Matt elaborates on the complexity of MicroStrategy’s model, highlighting that from a shareholder perspective, the company's Bitcoin exposure isn't leveraged but rather offers a unique value proposition.

• Matt Levine (06:58): "From the shareholders perspective, it is just not Levered bitcoin exposure. ... If you put in a dollar, you get like 50 cents worth of bitcoin, which is the opposite of leverage."

The hosts contemplate the sustainability of Chanos's short position, suggesting that while Chanos may be correct in critiquing the strategy's foundation, it doesn't inherently guarantee the success of his short trade.

• Matt Levine (07:51): "But MicroStrategy still does. I mean, it's coming a little bit, but it is a little bit weird to me for Saylor to criticize Chanos..."

Private Equity Hiring Dynamics

Transitioning from the MSTR discussion, Matt and Katie explore the shifting paradigms in private equity hiring, drawing parallels to Jamie Dimon's recent stance on recruitment practices at JP Morgan.

• Katie Greifeld (15:46): "You wrote that no one likes it. It's amazing. They fixed it. They just fixed it."

Matt reminisces about his experience clerking for a federal judge, drawing comparisons to the competitive and often unsustainable hiring practices in private equity.

• Matt Levine (17:20): "I've been interviewing since I was a child. But still like you get a better sense of who actually wants to do it if you interview people after like a year in banking than if you interview them after 20 minutes in banking."

Katie brings up historical attempts by firms like Morgan Stanley to regulate hiring timings, which faced pushback due to competitive disadvantages.

• Katie Greifeld (18:26): "But it sounds like you're saying you don't think that this truce of sorts will last."

Matt speculates on the future of PE hiring practices, predicting that the current resolution may not hold indefinitely.

• Matt Levine (20:10): "Yeah, but you do the same trade. They don't have to pay to borrow the stock. They can't get squeezed out of their short."

The discussion further touches upon the challenges of early recruitment and the potential for increased "duds" in the hiring process due to lack of experience among early recruits.

• Matt Levine (24:20): "I think it's mostly agree with them. I want to tell you about a couple of reader emails I've gotten about this topic."

Katie and Matt debate the sustainability and rationality of the current hiring frenzy, considering factors like AI's impact on junior roles and the intrinsic limitations of early recruitment.

• Katie Greifeld (22:33): "The reason why everything has been pushed earlier is theoretically because they want the best analysts."

Tower Research Capital's Hedge Fund Venture

In the latter part of the episode, Matt introduces a story from the Financial Times about Tower Research Capital, a seasoned high-frequency trading (HFT) firm, which is launching a hedge fund to manage external capital.

• Matt Levine (28:43): "There's a story in the Financial Times about Tower Research Capital... launching a hedge fund to run outside capital."

He explains the traditional role of HFT firms and how Tower's new venture represents a convergence between proprietary trading and hedge fund strategies.

• Matt Levine (29:00): "Mid frequency strategies. I haven't heard that before. We talk about high frequency, but now we're talking about mid frequency."

Katie highlights a quote from a University of Illinois professor, emphasizing the finite earning potential in high-frequency strategies compared to transformative, long-term investment approaches.

• Katie Greifeld (35:26): "There's a quote in here from a professor over at the University of Illinois... Why stick to just mining gold?"

Matt concurs, drawing analogies to other industries and questioning the scalability of high-frequency trading profits.

• Matt Levine (34:45): "You can't make a trillion dollars... There's a lot of money in very high frequency understanding what stocks will go up in the next hundredth of a second."

They conclude by pondering the future trajectory of firms like Tower, balancing between proprietary success and the challenges of scaling with external funds.

Conclusion

The episode encapsulates Matt Levine and Katie Greifeld's insightful analysis of complex financial strategies and industry practices. From dissecting the contentious MicroStrategy debate to scrutinizing evolving private equity recruitment and exploring innovations in high-frequency trading, the hosts provide listeners with a nuanced understanding of the financial world's dynamic landscape.

Notable Quotes with Timestamps

• Katie Greifeld (04:09): "Jim Chanos has a short thesis when it comes to Michael Saylor's strategy."

• Matt Levine (06:58): "From the shareholders perspective, it is just not Levered bitcoin exposure."

• Katie Greifeld (05:53): "Mr. Saylor wants you to value his business based not only on the net value of his bitcoin holdings but additionally with a multiple on the change in that nav, exclamation point."

• Matt Levine (24:20): "I think it's mostly agree with them. I want to tell you about a couple of reader emails I've gotten about this topic."

• Matt Levine (34:45): "You can't make a trillion dollars... There's a lot of money in very high frequency understanding what stocks will go up in the next hundredth of a second."

This comprehensive summary captures the essence of the "Smack-ish: MSTR, PE, MFT" episode, providing listeners with a clear overview of the discussions and insights shared by Matt Levine and Katie Greifeld.