Can anybody here explain to me what is the purpose of MSTR if the MNAV premium disappears? If the NAV premium disappears they can no longer productively issue shares and If they are just issuing debt instruments paying 8 - 12% interest to buy Bitcoin you can just IBIT shares then get a margin loan against it and pay 6 - 10% interest (and buy more BTC with the money) which is less than what MSTR is paying.
They made it for the video.
How are they increasing BTC yield currently? This is the answer.
Care to elaborate on how you think it works and why my analysis is wrong?
First off, it's a trade, I've always said that. It's just a long term (10 year) trade that will be emotionally difficult, too much so, for most.
Second, they can get NAV from time delays with STRC offerings, and their other offerings. The hurdle rate will provide.
MSTR works just fine with an MNAV of 1…they still increase share value by buying more bitcoin. Buying 1 bitcoin worth of MSTR will grow over time, in bitcoin terms. It’s practically the only investment that does. Selling common shares is only 1 of 5 ways to raise capital to buy bitcoin. Selling preferred stock is more accretive to shareholders in most cases, unless mnav is high.
IBIT margin loan might accomplish the same thing, but Strategy does not want to buy IBIT shares, they want to have their own bitcoin and come up with their own products. I don’t think you can do margin loans in certain accounts like 401k/403b/IRA either.
The other advantage of the preferred stocks: they never come due — there is no principal to repay and no debt on the balance sheet.
Paying 10% interest to buy an asset that is appreciating 50% is still a good buy. The total addressable market for STRC is insanely huge… tens of trillions. As long as fiat exists, MSTR will be able to increase bitcoin per share.
I think in time, STRC or something like it is how bitcoin will recapitalize fiat. Keeping a cash balance in STRC instead of CDs, money markets, or other short term cash equivalents, will change the entire system. It’s a product the entire world is starving for…STRC is the real “stablecoin” in that it is essentially a way to maintain value through fiat debasement but without the volatility of bitcoin.
MSTR is like an oil refinery for BTC. Insurance companies, pensions, banks: can’t tolerate the volatility of straight BTC. Strategy removes some of the volatility of BTC for different use cases :
STRC, STRE: short term
STRF, STRD, STRK: long term
They are building a bitcoin yield curve, stripping some or all of bitcoin’s volatility, and making financial products that have a big market.
I believe the safest place for money is in BTC…but if you have enough BTC and still want to invest — the only investment that can increase in BTC value is MSTR. Investments have more risk than money, that’s why they have returns. MSTR has more risk than BTC, but it also can provide a return, measured in BTC.
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