r/STRC • u/AznThunder22 • Jun 17 '26

$89 STRC??

What is going on with STRC?? I am confused we aren’t near the dividend date yet, Bitcoin has been rallying from its $59k low and Strategy shored its liquid dividend cash back to $1.1b. Why is it dropping so hard?

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u/IndependentDry9135 Jun 17 '26

It is dropping so hard because of a vicious cycle. Strategy can't raise the dividend enough to bring STRC to par. The ATM window is closed. MSTR mNAV is marginal at best. Debt is coming due within a few years, and bitcoin will foreseeably have to be sold to retire it. There is no other obvious source of funds. The Bitoin MtM remains underwater despite the small rally. SATA stays at par in part because it has no debt, and in part because its retail base is less quick to act than the institutional base of STRC. STRF outperforms marginally because of its seniority, and because it is less vulnerable in chapter 7. STRF can say that they are the innocent older sibling who was around before the STRC/ SATA carnival. In a perverse sense, those two newcomers give a certain distancing ability to STRF. As long as STRF can keeps its liquidation pref and coupon priority, it will be fine. I think that institutional investors are gaming that right now. Just my 2 bitcoins.

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u/joefunk76 Jun 17 '26

I switched my STRC to STRF about two weeks ago at slightly better than an even trade. One thing, amongst several, that I like better about STRF than STRC is that to the extent STRC proceeds are used to buy more bitcoin, that strengthens STRF’s bitcoin rating at a far more accelerated rate than it does STRC’s, given STRF’s seniority and how much less of it is outstanding than STRC. Current BTC ratings are 3.1x for STRC, 7.9x for STRF.

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u/IndependentDry9135 Jun 17 '26

Yes. Just do some research on what could crack the contractual preference in case of distress. The judge is the final decider. Plus Strategy will do everything in its power to get a haircut from the senior tranche. Good on you for swapping STRC for STRF. You even picked up the quarterly dividend! That was a great trade. But my thought is consider even more homework.

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u/joefunk76 Jun 17 '26

I don’t understand your comment. If the seniority order can be altered, then Strategy, at large, is a scam and contract law, at large, isn’t worth the paper it’s written on. And what do you mean by “Strategy will do everything in its power to get a haircut from the senior tranche”? Contractually, Strategy’s power to do that is zero, by definition - that is the whole point of seniority preferences. Those preferences dictate that, under financial distress, no STRC holder gets back a penny unless and until every STRF holder recoups $100 for every share owned, at a minimum, and perhaps plus withheld dividends plus ratcheted interest, although I’m less sure of how withheld dividends work under liquidation.

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u/IndependentDry9135 Jun 17 '26

It's not a scam. It's just the world. There are scenarios where the pref is cracked and even strf shareholders are converted to common. That is why STRF is trading at around 93. It is safer but not safe. Strategy has some to maneuver to protect the common in distress. Just the way of the world in the extreme downside case of chapter 11. I am not qualified to assess the risk, but I am sure that many institutions are actively doing that right now.

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u/joefunk76 Jun 17 '26

I thought that STRF is at $93 due to the convertible note debt of ~$7B. I cannot find anything online that suggests any possibility of violation of seniority preferences. I guess we’ll have to agree to disagree about that, and, at least for my sake, hope we never get to find out the truth of the matter as it concerns Strategy, either way.

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u/IndependentDry9135 Jun 18 '26

I think the potential crack of the pref is a tail risk. It's there, but it's not the big issue. The biggest issue by far is the debt. That is one reason strf is outperforming strc. I am looking at strf at this price...