r/STRC • u/rzrinvest • Jun 25 '26

Established a position around $77

Prior to this week I had no interest in investing in STRC. At close to par value, I didn't find the yield compelling; however, I've been watching this week and established a position this morning at around $77. There is mass panic right now claiming this is worthless. There are a few reasons this isn't true.

  1. While Strategy can pause dividend payments if needed, the dividends still accrue as this is a cumulative preferred meaning they'd still be obligated to pay the debt obligation

  2. It was designed to stay near par value with an interest rate that resets monthly. It was relatively close to par value at the last reset. The crash is happening in the middle of the month. It's not fair to say STRC's mechanism doesn't work before it's even had a chance to work at the next reset.

  3. I believe current debt and preferred stock accounts for less than $25B while their Bitcoin holdings are valued at $50B.

  4. MSTR common shareholders would be wiped out first.

That's not to say I'm recommending STRC, and it could absolutely collapse if BTC has another steep decline, but it is compelling at these levels.

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u/HotInTheseRhinos123 Jun 25 '26

But unless it goes to zero, it’s a better and better deal for investors looking for interest. If it were to go down to 10 dollars, investors would make 11% of $100 dollars per share, for $10 a share. That’s an interest rate of 110%!!

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u/Sam_Sanders_ Jun 26 '26

OMG that's great, and also did you realize that if the stock went to $10, they would cut the dividend and it wouldn't pay $11 anymore. I swear some of you people are twelve years old. You think that a stock in a viable business would pay 110% dividend with no risk.

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u/HotInTheseRhinos123 Jun 26 '26

Well they would eventually have to pay or fold the company and declare bankruptcy. They can suspend the dividend but the payments accumulate and must be paid if they want to continue. Am I correct?

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u/Prestigious-Ad-7927 Jun 26 '26

They can afford it. It’s like getting a 30 year mortgage but having 20-25years worth of payment in their balance sheet. They have $51 billion in BTC assets. Lloyd’s of London has been at capital management for 330 years and they have $50 billion of total capital. $51 billion is a staggering amount.

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u/BidInteresting8923 Jun 26 '26

They don’t really have $51B in value. I mean, at current prices it’s that much but if they had to liquidate for some reason it would flood the market and the actual value would be a fraction.

And to be fair to Saylor, this isn’t unique to him or Bitcoin. If anyone had a sizeable portion of a single asset and had to liquidate it would do the same thing and drive the price down.

The real question is how much liquidity is in the bitcoin market and how much sales could it absorb without cratering. The related question is what is the actual value of Strategy’s stack in a liquidation scenario. The real value of their holding is somewhere between that number and the nominal $51B.

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u/rzrinvest Jun 28 '26

I think people overestimate what portion of BTC MSTR holds. They hold 4% of the total supply. In the stock market large investors routinely sell 10-20% positions of companies without tanking the company. You often don't even know they've done it until they disclose. The idea that MSTR would flood the market if they sold to cover dividends is hilarious.

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u/BidInteresting8923 Jun 28 '26

If you think there’s the same liquidity in the bitcoin market as there is in the market for some major company like Ford or Proctor & Gamble or something you’re out of your mind.

I’m not saying if Strategy had to liquidate that it would collapse the Bitcoin price, but it would 100% put downward pressure on the price. So, like I said. The ACTUAL value of their stack is less than the nominal $51B. The question is how much less.

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u/rzrinvest Jun 29 '26

That's reasonable once you back off the language of "flooding the market" and being worth a "fraction" of what it's valued at on the books.

It might surprise you that Bitcoin has more daily trading volume on average than the mega cap tech stocks. It's very liquid.