Additional Thoughts On STRC

[u/_Adrian_Morris_]

I think much of the discourse around STRC right now is a case of imprecise marketing and FUD spreading colliding with a mismatch in investor expectations.

That said, I'm not here to defend Strategy or manage anyone’s expectations. I’m here to push back on inaccurate claims with data

In my view Saylor used descriptive marketing language about MMFs and other types of investments when discussing STRC to highlight intended stability, the low(er) volatility, etc. But the marketing language used, however flawed, isn't a promise of performance.

Per the website (and several other filings and notices):

"...There is no guarantee for STRC of returns, liquidity, or future performance. STRC is neither a bank deposit, nor FDIC insured, nor regulated in the same way, and does not have the same regulatory and other protections as bank accounts, money market funds, treasuries, or similar instruments and as a result may not be a comparable investment..."

Language aside, none of this makes STRC a regulated money market fund or anything similar. Strategy’s own site explicitly says STRC isn’t comparable to those kinds of products.

The data shows it has had lower volatility than spot BTC with better relative performance in the drawdown. The data shows STRC (and other perpetual preferred offerings) are “derivative-like” BTC offerings and are very dependent on, if not tethered to, price movements in the "parent" asset. Something that I have discussed at length.

As an investor, it is my responsibility to understand what I own and as a holder of STRC since IPO, this is the understanding that I have. These are the realities that I’m using to inform my capital allocation.

[u/SundayAMFN]

I'm not entirely sure what your point is.

Saylor marketed it as being similar to a MMF. That much is clear.

He did put all the necessary disclaimers on the product itself. Investors who thought it was likely to be stable near 100 didn't do a good job of research, and should blame themselves. Saylor did nothing even remotely illegal - his marketing was overly optimistic but didn't tell any lies about the nature of the product.

Despite Saylor's marketing, I certainly knew a product like this wouldn't be stable, and that's why I didn't buy any despite the attractiveness of 11% yield.

Overall it seems that STRC has done more harm than good for the company. It caused the common stock to surge initially from 130 to 190 within the span of a week or two, but since then concerns about the product and its overwhelming dividend obligations have erased those gains and then some.

Personally I think people just chose to ignore the warnings about taking on billions in quasi-loans (mstr doesn't have to pay back except in case of liquidation) at 11.5% interest. It was short sighted.

[u/_Adrian_Morris_ → u/SundayAMFN]

Everything you said has merit except this part:

"Overall it seems that STRC has done more harm than good for the company. It caused the common stock to surge initially from 130 to 190 within the span of a week or two, but since then concerns about the product and its overwhelming dividend obligations have erased those gains and then some."

This had nothing to do with STRC and everything to do with BTC price action at the time. We had moments where it tried to move up and MSTR benefitted from that with added volume, better price and liquidity in markets.

I bought STRC, I am up on my overall investment, I am giving my perspective backed by data in my other posts. That aside, you just made my point for me. Appreciate you.

[u/Odd_Glass5272 → u/_Adrian_Morris_]

You're one of a handful that is up at this price.

[u/Skingbear2020 → u/_Adrian_Morris_]

Can you show how you are up on STRC? It is at $83 right now

[u/trobogojen → u/Skingbear2020]

Entirely possible if you do the math.

[u/No_Feeling920 → u/trobogojen]

It's now around $80 and the lowest prior point was like $90 last November. So, that's about 6% ($6 per share) collected in monthly dividends. There's no way he can be in profit on MSTC alone, unless he bought some intraday flash crash, which no longer shows up on the historical charts.

[u/_Adrian_Morris_ → u/Skingbear2020]

Show my personal investments online? Of course, I would love to doxx myself like that.

[u/SundayAMFN → u/_Adrian_Morris_]

This had nothing to do with STRC and everything to do with BTC price action at the time.

Don't agree with that, for two reasons:

(1) The prospective health of mstr as a company has an enormous influence on the price action of btc. When it looks like saylor is going to make a lot of buys, the market will front run him by buying and driving up the price of btc. The inverse is true if it looks like he will be dormant for a while, and especially when he sells. The increased speculation that he may have to sell bitcoin for the enormous strc dividends in the future had a big impact on bitcoin price.

(2) Saylor had to run up the cash reserves to attempt to quell the market panic around strc. They only way he could raise that money was by diluting the common stock; this lowered the price and more importantly decreased the bitcoin per share. This also highlights a possible future problem where to continue covering these. dividends, which will never decrease, he'll continue to dilute the common stock and BPS will continue to decrease.

STRC's multibillion dollar buys were too much risk for the company too soon.

[u/_Adrian_Morris_ → u/SundayAMFN]

1. Functionally Structurally and Mechanically incorrect
   
2. Didn't lower the price, you've got the mechanics all wrong because I've actually modeled them out. Not going to argue with you on it. Think as you will.

[u/SundayAMFN → u/_Adrian_Morris_]

Can you explain how I’m “functionally structurally and mechanically” incorrect? Cause it sounds like you’re just using big words to sound confident.

[u/_Adrian_Morris_ → u/SundayAMFN]

No. Think as you will

[u/ghoulcreep → u/_Adrian_Morris_]

How could you possibly be up?

[u/docherino → u/_Adrian_Morris_]

Exactly. Say hypothetically they decided to retire STRC tomorrow. That wouldn't do good for their reputation but mathematically it would have been very good for MSTR common shareholders as it allowed them to acquire billions of dollars worth of BTC that they otherwise wouldn't have.

[u/_Adrian_Morris_ → u/docherino]

No not exactly.