Matthew Sigel
Head of Digital Assets Research at VanEck, Portfolio Manager of NODE ETF
Strive's move to daily dividends on its SATA preferred transfers value from common holders to preferred holders through a higher effective yield, which is bad for mNAV though good for Bitcoin. That makes owning the common hard to justify. Strategy needed a shareholder vote just to pay twice a month. x.com x.com x.comÂ
Bitcoin treasury company equity like Strive's should trade at a discount to NAV, so its 59% premium is mispriced and declining as shareholders realize they pay up to take on lots of incremental risk. Only a rising bitcoin price increases bitcoin per share. Shareholders can collapse the premium by doing what the company does: sell the stock and buy bitcoin directly. x.com x.comÂ
Bitcoin treasury companies will and should trade at a discount to NAV, since money in a double-tax structure has no reason to trade at a premium to money. Participants are harvesting the premium against each other in a zero-sum game until it flips to a discount, in bull or bear markets. Since tracking began, bitcoin rose 4.9% and Strive's bitcoin holdings 4.7%, yet Strive shares fell 14.8%, leaving bitcoin 19.7% ahead. x.com x.comÂ
Strive's common ATM can lift long-run returns by funding bitcoin purchases at a share premium. Bitcoin is historically cheap; stacking in a bear market or before the bull market begins drives the biggest gains later. But too much weekly issuance can blunt upside, exhaust investors and cap mNAV expansion; share scarcity matters. The ATM is crucial, but caution is preferable. Cole Macro said preferreds should help keep dilution below Strategy's levels on the way up. x.com x.com x.comÂ
Falling STRC prices raise its effective yield, increasing Strategy's dividend burden and tying the instrument to occasional Bitcoin sales despite its large holdings. Saylor is promoting STRC's 12% yield paid twice a month, and the higher it is, the faster Strategy sells Bitcoin. Replying to @Blockcastcc's report of Peter Schiff's warning that Bitcoin could fall toward $20,000, Strategy should sell everything and repay: preferred holders can be paid, but common holders would be wiped out. x.com … Show more
Strategy's common stock faces ongoing selling, as Saylor will likely keep issuing MSTR to fund STRC dividends while it trades above 1x mNAV, then eventually cut STRC dividends unless Bitcoin rallies hard. Cutting the dividend is simpler than selling Bitcoin, despite claims he can't because he'd lose future STRC raises. Jeff Dorman puts 70% odds on Strategy continuing to sell small amounts of MSTR monthly at non-accretive levels, crushing the stock toward 0.70x mNAV. x.comÂ
Heavy inflows could lift Strive's mNAV above Strategy's for periods because they have more impact on the smaller company. Strive could do even better than 6x versus Strategy's 4x, as investors seek the faster Bitcoin treasury stock. x.com x.com x.comÂ
Strategy's model of lending against bitcoin holds up because a rising reserve asset sets a hurdle for investment, not a prohibition. If bitcoin rises 20% and an enterprise turns $100 into $140, it still grows wealth in bitcoin terms by 16.7%. The hurdle also falls as bitcoin matures, like any asset whose prospective return drops as its price rises. From 2013 through 2025, simply holding bitcoin beat almost any effort, but early adoption is a poor discount rate for every future investment. x.comÂ
Raising Strategy's STRC rate could lock common shareholders into costly dividends after sentiment improves. STRC is six times SATA's size; each 0.5-point hike costs $43m a year on existing shares, without evidence it can sustain par. Buybacks have pushed STRC toward par; as Bitcoin rises and daily payouts start, it will return to par at 12%. Reversing a hike without serious backlash may be difficult for 5-10 years. x.com x.com x.com x.com x.comÂ
Strive is executing flawlessly on a playbook of issuing well-supported preferred equity and using that permanent capital to accumulate Bitcoin. Its SATA preferred has 17.7 years of dividend coverage and trades at par, which lets Strive acquire more Bitcoin and strengthen its capital structure as the treasury grows. Strategy runs a variation of the same playbook, and the question now is how quickly each turns preferred issuance into more Bitcoin per share. x.comÂ
Strategy has stopped being a bitcoin company and become a yield flywheel, diluting the stock or selling bitcoin week after week to keep the yield, despite claims all year that it was well capitalized. Per @DeItaone, it raised $333.7 million selling 3.46 million shares through its ATM program last week and bought no bitcoin, using proceeds for preferred dividends, $132.2 million of STRC buybacks and cash reserves. As @ShevY_xx put it, the yield is now the product and the coin just collateral. … Show more
