The Kid Analysts debate MicroStrategy's (MSTR) leverage and the ATM's impact. Is the stock pinned? We break down the new 'Stretch' (STRC) security.
Timestamped Overview
[00:00:00 - 00:06:35] Intro & MSTR Leverage Update
- The crew kicks off with the “crazy train” of MSTR, Bitcoin, and preferred equities.
- Jeff Walton provides the weekly leverage update: Strategy holds over 607,000 BTC, with $72B in assets.
- The leverage ratio is a low 16.3%, effectively 11.8% when accounting for in-the-money convertible debt.
- This means Bitcoin’s price would need to fall 88% to ~$14,000 before any major concerns.
- The company’s financial strength is described as “enormous” and stronger than ever.
[00:06:35 - 00:49:48] The Great MSTR Debate: Bulls vs. Bears on Volatility & The ATM
- A heated discussion on MSTR’s performance, leverage, and the need for more “juice.”
- Dan argues MSTR needs to “smoke the call sellers” by expanding upside volatility through a higher leverage ratio.
- Adrian counters that market sentiment (MNAV) is driven by macro trends and liquidity, not something Strategy can control with the ATM.
- The conversation covers the impact of passive ETF flows (like QQQ) and algorithmic trading pinning the MSTR/IBIT ratio.
- The upcoming Q2 earnings report is highlighted as a massive catalyst, with a potential $10-11 billion net income announcement that could attract new buyers.
[00:49:48 - 01:12:39] Introducing STRC (“Stretch”): A Stablecoin Killer?
- The crew dives into Strategy’s newest product, STRC, a perpetual preferred equity.
- STRC is designed to be a stable, zero-duration instrument, with its price algorithmically pinned between $99 and $101.
- It offers a high yield (starting around 9%) with cumulative monthly dividends, making it highly attractive for investors seeking stability and income.
- Ben Werkman calls it the “equity version of a stable coin,” perfect for parking cash and generating yield without capital risk.
- The target market is enormous, including US dollar bank accounts, money market funds, and retirement accounts.
[01:12:39 - 01:35:51] The Future of Bitcoin-Backed Finance
- The group discusses how these products are creating a new financial system built on Bitcoin.
- Ben explains these instruments are the “loading dock for capital coming into Bitcoin,” draining fiat from the traditional system.
- They discuss the potential for these securities to solve the retirement crisis by providing stable, high-yield income backed by the world’s best collateral.
- The conversation touches on retiring the old convertible bonds to clean up the capital structure and improve the credit quality of the preferreds.
- The difficulty of getting official credit ratings from agencies that don’t yet understand these revolutionary products is explored.
[01:35:51 - End] Final Thoughts & The Macro View
- The crew concludes that we are still incredibly early, with 99.9% of people having no idea these products exist.
- They discuss how the market structure has fundamentally changed since past cycles, with institutional buyers creating a stronger structural bid for Bitcoin.
- Tim notes that major banks like PNC are finally enabling crypto buys for customers, a sign of mainstream adoption.
- The final sentiment is that this is the “digital gold rush” and the most exciting story in all of finance.
Notable Quotes
Volatility & Performance
It's really, really, really, really important for the future of MSTR for the next, during the next move in Bitcoin, MSTR has to smoke the call sellers.
Dan Hillery @hillery_dan
MNAV & Sentiment
If volatility is vitality, then sentiment and subjectivity is a fuel for reflexivity... I always challenge people to try to justify a multiple without sentiment and without future expectations.
Adrian Morris @Adrian_R_Morris
The ATM Debate
The shorts are getting exit liquidity essentially from the ATM.
Mason Foard @MasonFoard
The Big Picture
This is the biggest story in all of finance right now. We need to talk about it. People need to talk about it. It's different.
Jeff Walton @punterjeff
The STRC Product
It's kind of like creating the equity version of a stable coin here... You can effectively get S&P 500 returns with no capital risk. I mean, just think about that.
Ben Werkman @BenWerkman
Bitcoin Onboarding
This is capital being onboarded to Bitcoin, right? This is the loading dock for capital coming into Bitcoin. If you are a bitcoin maxi and you want to drain capital out of the traditional system, this is the ramp.
Ben Werkman @BenWerkman
The Opportunity
What we're talking about... that's how early we are. It's just unbelievable when you really zoom out.
Tim Kotzman @timkotzman
Final Word
If Fiat is a melting ice cube, then strategy in the preferreds converting Fiat to Bitcoin is like glacier formation. Boom.
Soleil Nitu @nithusezni