MicroStrategy 25-year veteran closes all positions 90%! Profit of 19.69 million involved in insider trading?

MicroStrategy's (MSTR) Michael Saylor is still wildly purchasing Bitcoin, but it seems that there are not many people who believe in him anymore. Not only has the stock price fallen below its net value, but even Vice President Shao Wei-Ming is selling off his own shares. Since September 18, he has sold low-priced options shares in the market in 5 batches, continuing until November 14, with total profits of $19.69 million, raising questions about insider trading.

25 years veteran liquidated holdings 5 times, cashing out nearly 20 million

(Source: SEC)

MicroStrategy's Executive Vice President, Shao Wei-Ming, recently sold 7,934 shares of MSTR stock at a price of $217.79 per share, cashing out $1.72 million. This is the fifth dumping he has made since September 18, and the entire dumping plan has lasted nearly two months. This strategy of selling in batches indicates that Shao Wei-Ming has adopted a cautious risk management approach, rather than a one-time large sell-off that could trigger market panic.

From a timing perspective, Shao's selling began on September 18, when MicroStrategy's stock price was at a relatively high level. Throughout September to October, MSTR's stock price soared along with Bitcoin's rise, providing Shao with an ideal window for unloading. He chose to gradually reduce his holdings during this period, indicating that he is not optimistic about the market outlook, or at least believes that the current price has fully reflected the company's value.

From the source of the dumped stocks, these are options stocks acquired at a low price. As an executive, Shao Wei-Ming's compensation package typically includes a large number of stock options, which may have an exercise price far below the market price. For example, if his option exercise price is $50 and sold at $217.79, he could earn about $167.79 in net profit per share. This option arbitrage is a common component of executive compensation.

However, the key is not in the arbitrage itself, but in the timing and proportion of the dumping. If Shao is confident about the company's prospects, the rational approach would be to exercise the options and hold long-term, waiting for a higher price. His choice to dump a large amount at this time, especially accelerating the liquidation in recent months, sends a clear signal: he believes the current price may have peaked, or at least faces significant short-term correction risks.

Shao Wei-Ming Sell Timeline

September 18: The first dumping begins, MicroStrategy's stock price is at a relatively high level.

During October: Continuous batch selling, in line with BTC rising to a peak.

November 14: Last sell-off of 7,934 shares, cashing out 1.72 million USD

Total Profit: Approximately 19.69 million USD cashed out in the last two months.

Remaining Shares: Only 32,726 shares, accounting for only 10% of the original holdings.

Warning of a total cash-out of 91.7 million dollars since 2021

According to SEC insider trading data, since 2021, Shao Wei-Ming has sold 267,396 shares of MSTR stock, cashing out a total of approximately $91.7 million. This figure is astonishing. $91.7 million is astronomical for a corporate executive; it is not just normal wealth realization but more like a systematic position reduction.

Half of it is from cashing out this cycle (the end of 24, with July/October being the peaks), and the last time he cashed out such a large amount was at the historical high of the bull market in 21, with nearly 30 million dollars withdrawn. This time comparison is very convincing. In 2021, Shao cashed out heavily when Bitcoin was close to its historical high of 69,000 dollars, which later proved to be a perfect timing to escape the peak. Bitcoin subsequently fell over 70%, and MicroStrategy's stock price also crashed.

Now, Shao has once again cashed out heavily near the highs. Although Bitcoin has not yet reached a new all-time high (currently peaking at $126,000 before retreating to around $88,000), Shao clearly believes that the risk-reward ratio is no longer favorable. He made large cash-outs in July and October, both of which were local peaks in MicroStrategy's stock price, demonstrating his keen judgment of the top.

After the cash-out sale in November, Shao currently holds only 32,726 shares of MSTR stock, meaning that 90% of the position has been liquidated! This ratio is crucial. If an executive reduces their holdings by 30-50%, it may just be normal wealth diversification or personal financial planning. However, when the reduction reaches 90%, it is almost equivalent to a complete exit, implying a loss of confidence in the company's prospects.

Who is Shao Wei-Ming? He has been with MicroStrategy since 2000, making it 25 years, and has served as Senior Executive Vice President, General Counsel, and Company Secretary since December 2014. He is arguably the person who knows Michael Saylor and MicroStrategy the best. As General Counsel, he has been involved in the legal review of all major decisions of the company, including MicroStrategy's aggressive Bitcoin purchasing strategy and complex financing structures. His understanding of the company's financial situation, legal risks, and strategic direction far surpasses that of external investors.

Unfortunate Signals Revealed by Insider Trading Data

The SEC's insider trading disclosure system requires company executives to publicly report their trades in their own stocks within a few days. This transparency aims to prevent insider trading, but at the same time, it provides external investors with a window to observe the confidence of insiders. When a large number of insiders sell off at the same time, it is often a strong signal of poor company prospects.

Shao's selling model demonstrates a high degree of planning and discipline. He did not sell all at once at a single point in time, but instead distributed his sales in batches near the peak price. This approach maximized the cash-out amount while avoiding the impact of a large single sell-off on the stock price. From the professionalism of trade execution, it is clear that Shao has thought this through; this is not an emotional panic sell, but a rational risk management decision.

In stark contrast to Shao's actions are Michael Saylor's public statements. Saylor has been continuously promoting the long-term value of Bitcoin on social media, and MicroStrategy has also been buying more Bitcoin. However, when the company's core executives are selling off their stocks in large amounts, this inconsistency has raised questions among investors. If Saylor is indeed so optimistic about Bitcoin and MicroStrategy's prospects, why is his closest lieutenant fleeing?

MicroStrategy's business model is essentially about leveraging to go long on Bitcoin. The company raises funds by issuing bonds, convertible bonds, and preferred stock, and then uses these funds to purchase Bitcoin. This strategy generates significant returns when Bitcoin rises, but also amplifies losses when it falls. As the General Counsel, Shao has a deep understanding of the legal and financial risks of this leveraged structure, and his large sell-offs may reflect concerns about this high-risk model.

Bitcoin Trends and Polymarket Price Predictions

(Source: Polymarket)

On November 19th, everyone saw the market: BTC plummeted from 92,000 to 88,000 USD, and it seemed like a disaster was imminent. At this critical moment, NVIDIA managed to push the price of Bitcoin back up single-handedly. The financial report showed that NVIDIA's revenue for the third quarter was 57.01 billion USD, an increase of 62% (expected 55.19 billion USD); non-GAAP adjusted EPS was 1.30 USD, an increase of 60% (expected 1.26 USD); data center revenue was 51.2 billion USD, an increase of 66% (expected 49.3 billion USD). After the performance announcement, NVIDIA's after-hours price surged by 5%.

But in fact, data statistics have long shown that the relationship between U.S. stock fluctuations and Bitcoin is only half; when U.S. stocks rise, Bitcoin does not rise (this time it just rebounded to the previous day's price); however, when U.S. stocks fall, Bitcoin falls drastically. The major player Wintermute stated: Bitcoin follows the fall but not the rise, which is going to be tough. This asymmetric correlation is currently Bitcoin's biggest weakness.

On Polymarket, the probability of Bitcoin falling below $80,000 is still as high as 73%. Polymarket is a blockchain-based prediction market platform where participants bet real money on the outcomes of future events. A 73% probability means the market believes the likelihood of Bitcoin dropping below $80,000 is much greater than maintaining the current level. This collective judgment often has self-fulfilling characteristics; when most people believe a fall will occur, their actions (reducing positions, short selling) will help make the prediction come true.

MicroStrategy, as the most aggressive Bitcoin concept stock, has its stock price highly correlated with Bitcoin. When Bitcoin falls below $80,000, MicroStrategy's stock price may face a more severe drop. Shao Wei-Ming's early liquidation might be based on this expectation. As an insider, he might possess information unknown to external investors, such as company financing pressures, debt maturity schedules, or internal assessments of Bitcoin price forecasts.

For the average investor, a mass sell-off by insiders is one of the most important warning signs that should not be ignored. When those who know the company best choose to leave, outside investors should at least reevaluate their investment discourse. This does not mean that the sell-off must be followed immediately, but at least one should be vigilant, set tighter stop losses, and reduce leveraged positions. The story of microstrategy may not be over yet, but Shao Wei-Ming's actions suggest that the climax of the script may have passed.