Soros Fund Management purchased over $250 million worth of MicroStrategy convertible bonds in 2021.

According to the latest 13F report, Soros Fund Management LLC owns 193 stocks valued at approximately $6 billion. It also disclosed holdings in Microstrategy, a well-known Bitcoin holder, with over $250 million worth of convertible bonds.

Financial Giant Soros

Soros Fund Management LLC is a U.S. private investment management company founded by Soros Geroge Soros and his former business partner Jim Rogers in 1970. It was previously a hedge fund and later converted into a family office.

In 1992, Soros famously shorted the British pound and bought German marks through his Quantum Fund, earning $1.8 billion and gaining legendary status in the financial world, earning him the nickname "the financial giant."

Soros Fund Bought MicroStrategy Convertible Bonds since 2021

Reviewing the previous 13F filings, it was found that Soros Fund had actually bought the first MicroStrategy convertible bond 594972AC5 since the end of 2021, and then in mid-2022, it reported buying 594972AE1 and adding to its position. Over the past two years, Soros Fund has continued to hold these bonds and has also occasionally purchased call or put options on MicroStrategy stock, likely for hedging purposes.

According to the latest filing in May, the prices of the two convertible bonds have increased by 594% and 200% respectively, prompting Soros Fund to sell off some of the bonds. The remaining convertible bonds are currently valued at a total of $250 million.

Based on previous compiled data, the conversion prices of these two convertible bonds are $398 and $1,432, respectively.

Why does MicroStrategy issue convertible bonds with low interest rates and high conversion prices? What is the operating principle behind this?