SAYLOR'S $3.2 BILLION MASTER PLAN - STRC BACK TO PAR?!?

[00:00:00]Good day everyone. My name is Adam Livingston and I am the Bitcoin wizard.

[00:00:03]Strategy spent last week selling more MSTR shares to add cash to the USD Reserve and they purchased zero Bitcoin and immediately this inspired the usual online funeral procession for MSTR shareholders. We are being deluded. We are being sacrificed. Yes, we are hearing this over and over again from the totally uninformed out there.

[00:00:26]Apparently, cash entering a corporation vanishes into the same metaphysical dimension as missing socks and congressional accountability. Yet, inside strategies capital structure, liquidity has a job. It supports the preferred stock, especially STRC.

[00:00:44]Because the increased liquidity, it improves the credit profile. It helps stretch migrate back toward that $100 par value that we're all waiting for.

[00:00:52]the transaction of adding $200 plus million dollars of cash to the USD reserve that might look defensive at face value but in reality it is reloading the balance sheet for another offensive capital markets campaign. We are going to run the transaction through CEBE today. We are going to examine strategies credit rating roadmap. We are going to model Stretch's impact on MSTR.

[00:01:14]How actually important is it to get Stretch back up to $100? Everybody's freaking out right now. They want it back to $100 ASAP. But I'm going to run the math on how big of a deal it actually is for your MSTR gains if you are an MSTR shareholder. Also, I'll be talking about SATA and ASST. Good old Strive. Which one might be the better buy right now? You guys are going to love this content today. Whether you're a Strive shareholder and MSTR shareholder, this is a digital credit update and a reviewing of the capital markets activities last week from both companies. Do me a favor, hit the like button on YouTube and subscribe to the channel if you have not. That way you can support me spread the orange gospel of Bitcoin to the masses. And I do want to take a second to thank the Bitcoin Wave for sponsoring the video. You guys know how excited I get about Bitcoin Treasury companies and the insane levels of institutional adoption that we are seeing. But do not lose sight of the real revolution, Bitcoin in self-custody, 100% owned by you. You being sovereign and you being your own bank. My friends at the Bitcoin way will train you to become your own bank using only the best open-source tools that are out there. They will turn you into a node runner and they will make you a sovereign Bitcoiner. Do not delay your freedom depends on it. You can scan that QR code right there. Go to the bitcoinway.com/adom.

[00:02:28]Link is in the description below. So, as we review what exactly happened with strategy last week, well, they sold a bunch of MSTR shares. 2,732,318 common shares sold and that raised $263.5 million. Now out of that they added $225 million to the USD reserve. So now they have 3.225 billion in that USD reserve.

[00:02:52]So basically when you want to talk about the dividend coverage they have 31 years in Bitcoin. Yes, 31 years. That is over three decades of dividend coverage in Bitcoin. And in addition to that now they have 22 months. They are zeroing in on that 2 years of dividend coverage in their USD reserve. So the surface level reaction to this, it's all about the zero Bitcoin purchase last week because people are freaking out. The shares went out, the coins failed to arrive, civilization collapsed, and then of course you have the retail shareholders or people who are not shareholders but somehow have a very nuanced opinion about this. They carve out a tiny tombstone called Bitcoin per share. They cry that it's going down. This was a cash and credit transaction and it was done while Bitcoin was under stress which is very important that liquidity supports the dollar denominated obligations above the common stock here.

[00:03:46]Why is this important you might ask?

[00:03:48]Because when you look back at when strategy got their credit rating and S&P Global published two articles about the criteria for number one their initial credit rating and what they could do in order to potentially get a better one.

[00:04:00]They explicitly stated whether strategy can access capital during a Bitcoin stress. And what were they concerned about? They were concerned about the USD liquidity. The management of strategy, they walked straight into a bare market in 2026. They raised a lot of money.

[00:04:18]They deposited some of it into a reserve and then they took some of that to pay off some debt. That turned out to probably be a little bit of a mistake.

[00:04:24]Maybe it wasn't totally optimized.

[00:04:26]Regardless, it wasn't existential and now they have built it back up to a level that we've never seen before yet.

[00:04:32]So, this is observable credit positive behavior regardless of whether or not the timeline applauds. So, we have 22 months of dividend coverage in cash right now on the balance sheet. Now, is this a positive? Is this a negative? In my opinion, it's a positive. If you can get the stretch machine turned back on this reserve in conjunction with Bitcoin going up and to the right a little bit, I think it will really help the coverage of STRC. And I don't necessarily think that the market will be demanding such a high effective yield to hold STRC. So I do think this is credit positive. It's good. And at the end of the day, when you are swapping the common equity for cash and if it's even at a slight premium to the common equity Bitcoin exposure, it's actually accretive for shareholders. It's not dilutive. It is CEBE neutral. So if you can swap equity for cash, remember as an MSTR shareholder, you absolutely are exposed to the cash. I know it's not Bitcoin.

[00:05:26]What's the problem? We know that cash earns less than Bitcoin because cash has the metabolic rate of a tranquilized house plant. Its value comes from endurance because the preferred investors, they want their dollars on a schedule. While Bitcoin continues to experience lots and lots of volatility because it is true, Bitcoin is still in its infancy a little bit. Liquidity just buys time for volatile assets to continually recover. And for a company that's just built around an asset capable of losing 50% in the blink of an eye, time is very productive. So I really like this liquidity runway here.

[00:06:01]So running the exact math through common equity bitcoin exposure because there are some shareholders and non-shareholders that are hyperfixated on the week-to-eek actions of strategies management team. I have routinely show on this channel that ultimately so much of the percentage of the latent gains that are waiting there are already embedded with that 40% amplification ratio. So a little bit more Bitcoin on a week- toeek basis. It actually doesn't matter all that much. I will actually break down the math for you in a little bit here. But if we want to look at the snapshot of the prior week versus this week, if you count only the $225 million reserve increase, it is very very very slightly negative in CBE terms. But if you count all of the net proceeds that were raised because there was a bit of a discrepancy here between the $263.5 million versus that USD reserve $225 million contribution. It is actually accretive, but I think what happened, they probably sold some MSTR common stock to pay some of the stretch bi-weekly dividend. So regardless, it seems like it's very close to neutral here. It's a few basis points of neutral. I mean, let's just take a midway point here. I don't know. Let's call this 80 sats per share between the two. Using today's Bitcoin price, we just went above 65,000, which is cool.

[00:07:19]Uh 80 sats is 5 cents. So it's literally 5 cents of NAV per share. That is essentially the difference. So who really cares? And the reason why we are looking at the CEBE and ultimately not the gross Bitcoin per share because like I just said earlier, well, you are exposed to cash as an MSTR shareholder.

[00:07:40]So that's pretty cool because if you do sit on cash on the balance sheet, you know what a percentage of the balance sheet cash is not. It's not a senior claim. It is part of the residual that you are exposed to when you hold MSTR.

[00:07:52]So, you got to factor that in here. So, this nearly sets off all of the gross dilution. This is why the dilution clowns are ridiculous. And remember, what did I just say? About 5 cents of CEBE NAV per share. Who really cares here? If this helps get the Stretch Machine turned back on, I think it will be worth it for the MSTR shareholders.

[00:08:13]and strategy is laser-like focused on getting stretched back up to $100. I'm sorry, but we don't even have to look back a month. On June 29th, you guys got to remember they came out with the digital credit capital framework. And obviously, Sailor and Fong Lee, they have both come out on X ever since this was published and they've said they want stretch back up to $100. And the exact sentence from the management team says, "Strategy's corporate objective is for STRC to trade over time in a range of approximately 99 to $100 close to its $100 stated amount." And this is the simple plan in a flowchart form. You take the cash, you increase the credit confidence of the instrument. Hopefully that lets Stretch go back up to par and then the ATM reopens and then you get to buy more Bitcoin and juice the amplification of MSTR even further. By now, I'm sure you're starting to notice that all of the MSTR bearsers that have been crying about MSTR's imminent death spiral since February, all of these people are ridiculously stupid clowns.

[00:09:12]And I have been proven to be totally correct that there isn't an existential crisis during this bare market. They are raising billions of dollars at the drop of a hat, a fraction of the deep pool of liquidity that MSTR trades at. Bitcoin bare markets don't last that long historically, and we have been in one since October already. We're 9 months in and guess what? Strategy continues to raise more capital faster than they ever have. And all of those latent gains are sitting there just waiting for Bitcoin to go back up. And remember, during a Bitcoin bare market, S&P published their three-part credit road map for strategy.

[00:09:47]Number one, improve the dollar liquidity, which they're doing. Number two, uh reduce the reliance on the convertible debt. They retired a billion half dollars of that. And number three, access capital and stress. So through this Bitcoin bare market after Bitcoin is corrected 50% they are literally hitting on every single part of S&P's road map that they handed Strategy back in December. So by literally any objective measure even if you don't want to look at anything and use BTC yield uh it's still up year to date. Strategies having their most successful year of capital raising ever and they are knocking out the criteria for inevitable S&P 500 inclusion because their credit rating is going to go up. You think it's not? Bitcoins go into a million dollars, they're going to have 1 million Bitcoin.

[00:10:32]That's $1 trillion in net asset value at a minimum. So, strategy's dominating and the haters are just foaming at their mouths. Now, everybody is freaking out about Stretch getting back up to par.

[00:10:44]And honestly, I haven't even looked at today. So, let's look and see if the market liked this cash reserve edition.

[00:10:51]And hey, check that out. Not bad. It's actually up a couple dollars, 2.13%.

[00:10:56]Not terrible. We'll take it. and it almost hit $89 intraday just about 28 minutes ago. So, it seems like this is working so far. But regardless, the big question is, "Oh my gosh, can they please just get it back up to par? There are so many MSTR shareholders who have the time horizon of ants. They literally don't have patience at all." They're saying, "Adam, Stretch needs to get back up to par. We need to buy more Bitcoin."

[00:11:20]Yeah, that would be ideal. I'm not going to lie. But I also have patience. The real question is how much more stretch issuance will juice my MSTR returns. So I went ahead and crunched the numbers everybody. I ran some projections and I basically normalized I indexed all of the returns by controlling for a variety of variables. I assume that strategy does not issue any more MSTR except to pay the dividends. I assume that Bitcoin goes back to $100,000 that you can see right here. And then the different scenarios are that MSTR goes up with no stretch issuance, and then four different scenarios where they're issuing $500 million a month, $1 billion a month, $1.5 billion a month, and $2 billion a month for the next 12 months as Bitcoin climbs back to six figures.

[00:12:08]And also, there is zero MNAB expansion.

[00:12:10]The MNAB stays exactly where it is today, which is very slightly over the net asset value. So, it is a very small premium. And what are the differences?

[00:12:20]Well, it's actually not too crazy. I know the additional stretch issuance, it will help 100%. But people continue to ignore the latent gains that are already sitting there. Bitcoin is going to go up and to the right cuz we're all Bitcoin bulls. And there's also embedded amplification there already because of the outstanding preferreds and the outstanding debt. And so MSTR with no stretch issuance, the two gears in the formulaic equation of what actually dictates the MSTR multiple. You got the Bitcoin going up and CEBE per share going up which is actually derived from just gear one the Bitcoin price going up. So one variable changing actually influences two variables in the MSTR multiple. Therefore amplification happens. This is what the math tells you with zero MNAB expansion. MSTR with no stretch issuance at all in this scenario goes up 76.35% and it outperforms Bitcoin by 22%. So there you go. You get a 76.35% return if they're able to issue $500 million per month starting today for 12 months. You only get less than 3% additionally. Less than 3% again if they go back up to $1 billion per month issued. $1 billion per month would be slightly over their first year pace ever since STRC came out. $1.5 billion would actually still add less than 3 percentage points of return. And then $2 billion a month, which is close to their two best months ever, April and May.

[00:13:47]This would juice the return up to an 87.9%.

[00:13:51]So that would be about a 34% outperformance over Bitcoin versus the 22%. So yes, would it be great if they could get the stretch machine turned back on as soon as possible? 100%. I think it's a matter of waiting for Bitcoin to go up, hopefully raising that dividend because I do think they need to be more competitive with SATA because I think both instruments right now are competing for retail cash flows here. I don't think that the retail investors are doing sophisticated credit analysis at all. They are seeing the higher headline yield for SATA and they are seeing more frequent dividends. That's why I think SATA is being more successful right now. And that is the math broken down for what actually $24 billion of stretch would create for the residual if we did have Bitcoin go up to $100,000. The numbers are pretty sweet because Bitcoin is cheap right now.

[00:14:38]That's why people do want the stretch machine turned on because this would get them over 300,000 Bitcoin. And honestly, I thought they were going to get that much this year because they came out this year swinging for the fences.

[00:14:49]Stretch was really successful. They were issuing a lot of MSTR. So, they were buying a lot of Bitcoin. We're having a bit of a slowdown as of late, but we've seen some Bitcoin price stress.

[00:14:58]Ultimately, I'm not concerned knowing that the higher the Bitcoin price goes, Strategy just has the capital markets access available more to them and that's when they can buy more Bitcoin.

[00:15:08]Regardless, that's how the math breaks out. Now, Seda is running the same exact play inside of Strive, but they do have a smaller denominator. The corporate rapper is dramatically smaller. We know this. Strategy has over $50 billion of Bitcoin. Strive has about 1 billion. So, literally 50x the size we're talking here. Now, basically, I went ahead and modeled that same exact Bitcoin move going from $65,453 today to 100,000. There is a slight discrepancy in the Bitcoin price from when I calculated. You guys will see that. But regardless, it seems like ASST is going to rise 82.01% if the MNAB stays exactly where it is, which probably won't happen. but adjusting for just the current amplification. Them issuing zero more SATA and this is just the amplified move with the amplification that already exists on the balance sheet. They don't have any leverage cuz they don't have debt. So, it's only amplification with Strive, but this is closer to a 30% outperformance over Bitcoin. Now, obviously the big question is, okay, with their smaller scale, they're not able to issue as much preferred equity because you can only issue so much before you're 110% amplified Bitcoin.

[00:16:20]And do they want to run it that high?

[00:16:22]Probably not. Is there demand for that?

[00:16:24]Probably not, because it's trading below par right now when they are offering a 13% dividend. But regardless, I did plug in some projections. What if they're able to issue $100 million per month in SATA for the next 12 months? I'm not saying they will. I'm saying what if when the machine gets turned back on, what if they can do $200 million a month? What if $300 million a month?

[00:16:46]Now, I don't know which of these numbers is possible. None of this is financial advice. This is financial entertainment.

[00:16:51]You need to underwrite your own assumptions, but I did want to demonstrate how much harder the SATA issuance hits the convexity of the common stock. This amplified expression of Bitcoin as you continue to add on those preferred senior claims. The difference is quite staggering here because if they issue nothing and Bitcoin goes to 100K, that's an 82% return for ASST with zero MNAB expansion, but if you can issue $100 million a month, that juices the return by 30 percentage points, literally 30, while Bitcoin is obviously staying at that 52.78% return. If you could add another $100 million on top of that, that would be an additional 28 percentage points. And then if you could issue another $100 million on top of that per month, that means that that would add on another 28 percentage points of return. Look at the gap here between the Bitcoin and the SATA issuance. It's a considerably bigger gap. The torque that's hitting the balance sheet when you compare it to strategy as magnifies the effect because each dollar is landing against a much smaller equity base here. Obviously, Strive is super small. Would they be able to issue $3.6 billion of SATA over the course of a year? I think it's not impossible. Maybe in a Bitcoin bull market when everything's firing on all cylinders. But regardless, you can kind of see how much this would help amplify those Bitcoin terms when you look at the senior claims as a division problem with the Bitcoin assets there on the denominator. It goes up considerably.

[00:18:16]They juice the amplification despite Bitcoin going up. And because it's a division problem, you had the senior claims rising faster than even the Bitcoin going up. So, who knows exactly how much they're going to be able to issue, but I just wanted to demonstrate that small denominator is killer for ASST. And if you wanted to calculate how $10 million of each preferred stock issuance would hit both of these equities, it's very simple. Um, look at the $10 million as a percentage of the MSTR wrapper here. It's actually 0.027.

[00:18:49]That's it. But compared to Strive, it's 0.971.

[00:18:54]That is a 50x advantage for Strive. 50x.

[00:18:58]So yeah, that small denominator is a killer advantage. And there's the math broken down for you. Um, you get 4.58x more common equity Bitcoin exposure sats per share per $10 million of preferred issued. And that is a 10.9x increase more return impact per SAT for a 50.15x modeled return sensitivity per preferred dollar that is issued. Now, that's obviously just within the models that I went ahead and projected those Bitcoin price movements with. You know, the MNAB staying the same, all of those inputs.

[00:19:30]This is not a permanent physical constant. I'm not saying that. This is just the math on this snapshot. But remember, if you want to talk about the advantages of both of these companies right now, uh, look at Strive. They just bought 21 Bitcoin. They're still having buys that are, you know, relatively, really small versus MSTR. Clearly, Strategy has the capital fire hose. They have the scale, but ASST has the Bitcoin sensitivity. That is a great advantage to have. The big question is, hey, if there's a 50x advantage for preferred dollar issued for ASST, how much more can strategy raise of preferreds due to their scale once Stretch gets back up to par? It's a very interesting question.

[00:20:10]Can they outrun that small denominator advantage that Strive has? So, as we look to this week right now, what I'll be looking at is what Bitcoin is going to do. It's performing really well above 65,000 and holding very strong despite all of the chaos in the Middle East having another flare up. And when I look at digital credit, is it dead?

[00:20:29]Absolutely not. Every single dividend has been paid. I actually think that if you count all of the strategy dividends from when Strike came out in January of last year, and when you look at all the daily dividends that SATA has paid out, I think that the digital credit issuers have successfully paid out over 60 dividends successfully. If it's not 60, it's like 59 or 58. It's really close to 60 for 60 dividends paid. I look at the asset coverage of both companies. They are massively overcolateralized in my humble opinion. They're not pledging it as collateral, of course, but you know what I mean. The coverage is there. Over three decades of Bitcoin for strategy, you know, close to 2 years in cash. And I just showed you that so much of the common equity returns is made up of just Bitcoin going up. So, yes, would it be nice to get the preferred issuance machines turned back on for both companies? 100%. It's not an existential crisis to me. I think that we're going to be back at 70,000 80,000 eventually $1 million Bitcoin and I think there's going to be a lot of money made on the way because I think that digital credit is still offering a great return per unit of volatility endured and we are still in the infancy of this thing. So when I look to MSTR, I continue to be nothing but bullish because of the returns when I'm running the CEBE models. Same thing with ASST. I'm heavily allocated to both. And right now, we're just in bare market survival mode. And both companies are surviving incredibly easily. To me, it seems like they can meet their obligations, whether it's the debt, whether it's the preferred dividend that they have to pay out. And check this out right here.

[00:22:01]because they're now sitting on roughly $55 billion of Bitcoin, their net leverage is down to 6% only. I don't think I've seen it this slow. I think I only saw it at 7%. But their overall debt as a percentage of the balance sheet continues to drop. Just wait till Sailor and Fong can pay off all the debt, do their Dave Ramsey debtfree scream, and then amplify Bitcoin with stretch issuance and boost that amplification percentage from a 40 to a 70. Yeah, you excited for the volatility super gains then? I am. And then we'll load up the CEBE terminal to get that true MNAV where we're at right now because at the end of the day, we got to use their real MNAV, right folks? Let's go ahead and import this. And there you go. It's a 1.03x premium to the common equity Bitcoin exposure net asset value. That means that if they want to, they can probably just go raise another $200 million this week and it would be accreted to MSTR shareholders. So this is my entire point. Can they survive the bare market?

[00:22:57]We're 9 months in, keep raising the cash. It's not dilutive. Get the stretch machine turned back on. Kick the can down the road and patience will play out in my humble opinion. My name is Adam Livingston. I am the Bitcoin wizard. If you guys like this video, please hit the like button, subscribe to the channel on YouTube. That way you can support me spread the orange gospel of Bitcoin to the masses. Have a very terrific day, everybody. Do not party too hard. Class dismissed. And you know how excited I get about Bitcoin Treasury companies and the insane levels of institutional adoption of Bitcoin that we are seeing.

[00:23:27]But don't lose sight of the fact that the most important strategic reserve is your own. Bitcoin and 100% self-custody with zero counterparty risk. This is the revolution. My friends at the Bitcoin way will train you to be your own bank using the best open-source tools. They will turn you into a node runner. They will make you a sovereign Bitcoiner. Go to the bitcoinway.com/adom to schedule a free introductory call and get started today. Do not delay your freedom from the fiat system depends on