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Comment by bix6 | Hacker News Reader

If a company’s crypto holdings are worth more than its market cap wouldn’t that mean I should buy the stock as its enterprise value is higher than its current market cap? Unless of course it’s saddled with debt which this article alludes to but doesn’t explain since most of the purchases seem to be for share buy backs?

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> If a company’s crypto holdings are worth more than its market cap wouldn’t that mean I should buy the stock as its enterprise value is higher than its current market cap?

Well, one question to ask is if the company can actually cash out their crypto holdings at the current market price? If they have substantial holdings of thinly-traded crypto, the answer is usually "lol".

Faith in the company matters too. You can't compel them to sell, and if you think the company is going to slowly drive itself into the ground, you probably don't want to give them your $$$. There are quite a few companies that traded below their book value for that reason. IIRC, Kodak is a current example. Want to bet on that?

You would need a mechanism to extract that value- i.e. the ability to strip the company apart for parts. Buying a non-controlling portion of shares doesn't give you that ability.

Indeed. The decision-making apparatus is sometimes so starkly separated from the stakeholders that there's no reason to believe that the balance sheet and the stock price are likely to be correlated at all in the future. If the company doesn't pay dividends, and can't be sold off for its assets, then what is the function of equity?

I find Wall St. baffling for all the usual reasons, but this one is too rarely discussed.

So time for someone to do a big LBO?

If you see them returning value to shareholders in the short term, perhaps. But some of these DATs are giving their leadership massive pay packages (up to $400M[1]) so IMO they will sit on their treasuries as long as possible paying themselves huge salaries to... hold Crypto.

1. https://unchainedcrypto.com/a-musk-style-reward-anthony-pomp...

Yahoo was once valued at less than the value of its Alibaba holdings.

Businesses (or parts of) can have negative value - still worked out pretty well for the execs there.

It can be a good strategy but take a while to play out. I planned to buy GBTC when it was $8 in 2022 for that reason but managed to not do so, darn it. It's now $70.

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