Hey, what's going on guys? This is episode something, MSTR True North. We've got a huge
presentation we've been prepping for the last couple of days for you. Grant's going to give
us an intro. Dan O, the brains behind MSTR True North is going to give a little disclaimer. We're
going to hop right into it. There's a ton of material today. Super excited about all the info
we have. Hopefully you're still hanging in there. I know the stock price has been terrible.
Don't know what to say.
Hey, guys.
Sorry, I've got camera issues here, but I'm here with you.
First off, we wanted to say that while the information here might be great, fun, entertaining, and awesome, it is not financial advice.
Second of all, I just wanted to make mention of this.
None of us, we're all independent analysts.
None of us are on the payroll of Strategy, of Strive, or anyone else.
We're just here sharing our independent thoughts and analysis.
I know that's been a question flying around online. We're under no pressure or precedent to speak highly about any particular aspect of any of these companies we're going to be discussing.
Totally agree. So we're just here to give you our view on the macro indicators. Look, we've already seen these slides that Dan has put together. This is a really, really packed presentation we're going to go through.
We're going to try and do it within an hour.
We'll try and read the comments as they come up and give you our feedback about that.
But this is going to be different than a previous True North presentation, you know, talk, given the amount of slides and information that we're going to go through.
So, Dan, take it away.
I also just want to mention we've got a lighter team here.
We've got everybody's traveling everywhere.
So Jeff's over in Europe with Tim.
Jeff's the speaker at Bitcoin Amsterdam coming up in a couple days here.
I think they're in Prague today, the last couple days.
Then they're going to Amsterdam.
And then next week's London, I believe.
Ben's been traveling as well and launching a preferred equity.
So he's pretty busy.
Mason's been down in Brazil.
Soleil's in Nashville, I believe, at a Bitcoin conference there.
And Adrian's cranking on the AIs.
So you've got a grain of salt, Dan, Hillary, and myself tonight.
That's exactly it.
Yeah.
Let me get started.
I want to give a quick, and then you'll pull up the presentation and go right into it.
I will be mindful of time.
I'm watching the seconds here, so I'm not going to take longer.
Look, if you believe that natural fibers were displaced by synthetic fibers,
if you believe that in creative destruction,
that if AI is going to basically the typical analysis that you see,
we're seeing this in real time, what happened with Wikipedia.
Wikipedia basically just got killed by AI over the past three weeks.
It's been totally scraped by AI.
I did a post about this.
And so why am I talking about AI basically killing Wikipedia and Grokipedia?
is because AI charged for it.
So if OpenAI is charging $20 a user
and they're taking in $15, $17 billion a year,
they can hire the best engineers, the best people.
They don't have volunteers curating the information.
So what they've done is they made a moat
and they have money to back that up.
Not only that, they made a human-like interface
to go in and scrape all the information off of Wikipedia.
Right?
And so Wikipedia does offer an enterprise version to charge for it.
They didn't pay for it.
Wikipedia has lost 8% of their viewership.
It'll be down by 50% within a year, right?
And so they're seeking donations.
They didn't do, they were altruistic.
They tried, they didn't want to do with any form of advertising.
Why do I talk about this?
Bitcoin is artificial or synthetic money.
That's exactly what happened.
Our current money today is controlled by Federal Reserve banks that have to balance deficits.
And we rely on people to do this.
Bitcoin is either artificial, synthetic money.
It's the AI of money.
And it has a very controlled emission schedule.
It has a fixed supply.
And it's written into the code.
And so that's why Bitcoin is going to eat regular money.
And that's why I talk about this as an example.
If somebody hasn't seen Netflix put Blockbuster out of business, you'll basically see AI put Wikipedia out of business.
And that's an example of creative destruction.
And that's going to happen with Bitcoin in regular life.
Totally agree, Brian.
Dan, let's get this presentation rocking.
I'm ready to rip.
All right.
Let's see.
Go entire screen here.
And you're on.
Can you see that, Dan?
It is loading.
We are up and running.
2026, the year of digital credit.
All right, next slide.
So again, this presentation for everyone, we're going to keep it short.
We're going to keep it sweet.
It's going to be quick.
You can rewatch the recording if you do, in fact, want to.
So I want to start it off.
Gray and I are going to hop into the macroeconomic factors that are playing into both Bitcoin
and the overall equities market over the past six months and looking forward into 2026.
So you can see here the performance of the equal weight S&P 500.
And you can see the actual performance has been relatively weak.
The actual performance of the equal weight has been just over a double.
And what this shows you is the real stock market performance over the past 10 years
has been driven by the top seven performers.
The index weighted, the market cap weighted ETF being the S&P 500.
Next slide.
Here is the performance of the equal weight relative to the MAG7 performance.
So as Graham will hop in here, but over the past 10 years, the trade has been pushed to winners that are taking all the market share,
that are destroying all the brick and mortar mom and pop companies and sell the losers.
So that will play into our entire thesis around Bitcoin and then looking at preferred equities and treasury companies.
Graham, you have anything to say here?
Absolutely.
Yeah.
Yeah. So we've seen, you know, I think that the metric right now is 40% of the S&P 500 is made up of the MAG-7.
So what my thesis has been in my investing for my whole career is, why would I want to increase the share?
If you're looking at the equal weight, why would I want to dilute the winners with the losers?
Now, if there are plenty of other companies in the S&P 500 that have done really well as a percentage of their cap,
The problem is that they have a verification in the S&P 500 because it's market cap weighted.
And so therefore, there's a few other companies.
There's maybe 10 other companies that have done really, really well.
Right.
And obviously, we believe in MST are doing well.
But the key part here is that because their market cap is too low, it doesn't affect the
actual index itself.
So going back to this comparison right here, it's the MAG-7 makes up 40% of the S&P 500
why would you dilute it with the other 493 or why would you dilute it with the other 485?
Totally agree.
Let's jump right into this.
Totally agree.
And now we'll talk a little bit about just the PE ratios we've seen here.
We can see the MAG7 PE ratios if that's of any interest.
We'll talk about that a little bit later.
And then furthermore, this is something, Grant, I think you should hop on to.
We're looking at the forward price earnings ratios during different bubbles in the equity market
in these specific sectors. So, Gray, you've lived a little bit more life than me. What do you think
there and how are we looking out into the future? Yes. So for the people listening, I am not a
boomer. I'm just an old Gen X guy. But what I could tell you from the internet bubble,
there were some crazy statistics. I wanted to see what was the difference between what happened then
and what happens now. So what happened back in the olden days in 1998, 99, 2000, 2001,
there were 1,219 companies that went public in four years. The bulk of them went public in 98,
99, and 2000. Basically, you got about 1,100 companies went public. Probably most of those
companies went bankrupt a few years later because they weren't able to scale. So what are you left
with? You're left with the dominant players. Now, so what's different about the internet bubble that
happens today. The difference is the scale. Like open AI, if it goes public, it's going to go public
at $500 billion or these crazy valuations because it's been private for so long. Same thing happened
with Google. Google waited a really long time and just like Facebook before they went public.
So these companies wait till they get huge. So the market dynamics from the internet bubble to now
is different. And that's why looking at the past is important. It's not the number of the gross
number of companies that go public, it's the fact that you have these large companies that have scale
that end up being too big to fail. That's the part. Can they fail? Probably unlikely when they
get to this size. But I think that this is a great comparison talking about the nifty 50.
What this slide shows you is that in terms of the PE ratio, in terms of the dot-com bubble,
we're not even close to that, right? I mean, that's exactly what it's saying here. We're not
overheated. And on the flip side, Dan, you've talked about this before. If we don't have a
euphoric blow off top in Bitcoin, then there's no reason in theory why we should have this massive
drawdown. If you have a huge blow off top, then you're probably going to have a big drawdown.
You can't assume that it tends to be your proportional gain on the top and your proportional
drawdown should be similar. Now, and this time is different. Why do you think it's different?
because in January, the spot Bitcoin ETFs are going to be two years old.
And Ibit has, you know, $80 billion in it.
Exactly.
The price jumps up.
It's $100 billion.
Exactly.
And one more note to just support this sort of,
so we're talking about a change in sort of the price behavior of Bitcoin
over a long period of time, a 30 CAGR,
Sailor's referenced it, a lot of people have referenced it.
Some of the statistics is over the past 10 years,
we've seen a 25% CAGR from Apple, 22% CAGR from Amazon, 22% CAGR from Google, 19% from Meta,
25% from Microsoft, 74% annualized from NVIDIA, and 40% from Tesla. That's annualized compound
growth rate. And you just take the end price from the start price over a 10-year period.
The blended compound annual growth of the Mag7 over the past 10-year timeframe has been 26.5%.
So everyone's saying this 30 CAGR number is absolutely insane, but that's kind of the strike
zone for the blended average of the most successful securities and publicly traded companies on the
face of the earth. So that's where a lot of this thinking comes from. We're going to hop in now
into talking about kind of the debt framework and why interest rates are going lower over 2026.
Green, you want to explain these a little bit? Yeah, I want to make sure. And by the way,
you can definitely hear me, right? Hear me speaking? Yeah. Okay. So there's two charts here
and they're a little bit, let me zoom in, go to full screen. Okay. The top chart, what it's showing
you is the federal funds rate. And so basically during the 1980s, the big spike in the middle
and the federal funds rate, that jumped up because we had stagflation. Problem was you had persistent
high inflation combined with a lot of people out of work. And so what they had to do is they had to
make the interest rates really high to get that under control. But if you look at the green line
on the bottom, we had very little debt. What's different now is the debt, as we all know, hit
$38 trillion. Now, according to the big, beautiful bill that was already passed this year,
the debt is allowed for the debt ceiling is allowed to go to $41.1 trillion. We're authorized
for another $3 trillion. Now, if you look at the bottom slide, what you're seeing here is that
the debt, basically the interest on the debt is growing at, the interest on the debt is a trillion
dollars per year. That's just the interest on the debt. That's not paying down any principal.
And we know that the budget is about a $2 trillion deficit. So basically in 18 months,
sometime around June of 27, if not sooner, we're going to hit the debt ceiling again.
That will be after the election.
The election is November of next year.
But sometime between March and June of 27, we're going to be at $41 trillion.
And then the amount of interest on the debt will be more than a trillion dollars.
So what's a trillion dollars?
It's $800 billion.
Sorry.
It's what was my number?
It's $80 billion a month.
No, it's a trillion.
It's $80 billion a month going forward to get to a trillion dollars.
And that's what we're just paying on the interest payments each year.
So this is just crazy.
So this is going back to the S&P 500 performance.
What we're talking before is that, so why is this important?
They have to print about 6.5% of M2 money supply, and that's where you get this growth in the S&P 500.
So when you take a look at this, this is the comparison we were talking before.
All of the gains of the S&P 500, because it's market cap weighted, typically comes from the MAG 7.
And then you can see the S&P 500 down here.
So basically over the past 10 years, and why did I pick the past 10 years?
Is because you had 2000, you had the internet bubble, 2008, 2009 financial crisis.
We got quantitative easing, quantitative tightening.
So if you want to go compare this previously, things are different now.
You got $38 trillion in debt.
They're not the same going back to where we were.
There'll be a later slide talking about debt to GDP.
We're at World War II levels, even though we're not at war.
So that's why when you look at this chart, you can see the fundamental difference here
is the MAG-7 is the biggest companies are getting the most flows into them.
Exactly.
Index forward EPS. We'll go over this super quick. Grant, any really, really quick points you want to talk about?
Yeah, this was from Tony Carrera. Somebody said, oh, well, you know, why are the MAG-7 doing well?
You should show the EPS. Well, this is your earnings per share. Now, why does the MAG-7 have big EPS?
Well, they do stock buybacks. Why? They have a ton of cash coming in. This is what Saylor says.
Why do you surrender your cash? They surrender their cash to buy back the stock because it's the most efficient way to boost EPS.
Here's your 10-year CAGR or forward EPS for the MAG-7.
It's 20%.
The remaining 493 is 6%.
It's more than three times that.
They generate so much cash that instead of buying factories or hiring more people or paying a dividend,
they just buy back the shares, which is a riskless way of increasing the EPS.
This is financial engineering.
Nothing illegal about it.
If I was throwing off, if I ran one of MAG7 companies, I would do the same thing they're doing.
There's no difference here.
Totally agree.
All super good kind of macro framing as to why the MAG7 performs like they do.
I'm going to jump quickly into the PMIs.
I think they're a super important story for why Bitcoin and really the equal weighted S&P is just underperforming as of late.
And the PMIs are a diffusion index that weights 25% new orders, incoming customer demand across the manufacturing and service economy in the U.S. respectively.
The services economy makes up about 85% of U.S. GDP.
So we'll focus on that a little bit later.
But new orders to weight 25%.
Output level is about 25% production.
Employment 20%.
Supply delivery is 15%.
And inventory is 15%.
15%. So that's what the PMI survey is made up of. And it's a diffusion index. So it shows
if we're above 50, it's in expansionary territory and below 50, it's in contractionary territory.
So here is the services PMIs, again, about 85% of the US GDP, overlaid with the Bitcoin price
bubbles. And what you see is that the bubbles historically have occurred during periods of
extreme expansion in the services economy. And we've been about neutral for the past three years
in the services PMI. And I think this is a huge correlate to why Bitcoin, we haven't seen a blow
off top. And I think this is also very, very correlated to kind of, we're going to see a
decrease in interest rates over the next few years. And we're going to see kind of easing
monetary conditions, especially with the ending of QT and potential move into QE. Same story with
manufacturing PMI, a bit more pronounced. Manufacturing PMI has gone sky high over 60
in an expansionary territory in positive sentiment. And over the last three years,
we've seen expansion in Bitcoin or adoption in the price, a steady run up, but we haven't seen
any expansion in the PMI. So these are just macro sentiment indicators that are showing you why
maybe small caps aren't breaking out and why Bitcoin itself isn't breaking out either.
We've got a little bit of consumer sentiment here. I want to give kind of a story. So obviously,
the K-shaped economy story is pretty big. We've seen AI companies with their circular revenue
generation completely screaming and pulling the entire index with them. Small caps in the S&P 493
are totally lagging. Bitcoin is lagging with them. And you can see some of the sentiment
during Q3 earnings. Lower income guests are declining nearly double digits with McDonald's.
Households under 100K, 40% of sales are reducing their spend, ages 25 to 35 at Chipotle, Starbucks, frequent pressures on certain segments of their consumer base.
And even Dollar General are saying low income consumers are being pressed by current macroeconomic conditions.
So it all kind of leads to one thing, the jobs market's teetering as a result of AI.
The government is not yet issuing money to the citizens, but there seems to be potential loosening monetary and economic conditions on the horizon as a result of what could be kind of, you know, an end to employment as we know it over the next year.
Grant, any comments there on Dollar General or Starbucks?
I think that we live in two economies.
You know, I think that the consumer sentiment that you're seeing here is correct.
there's nothing I think that what I could tell you is that I have phone calls with executives
all the time and the most amazing thing I could tell you is that what they tell me privately
is pretty much 99 the same thing they say publicly there not much of a difference so if they saying that this is the consumer sentiment I would believe this And I drink this protein shake I stopped by Joe the Juice
They've got these protein shakes that are great.
They have an app, download the app, go there.
And the protein shake was $15.
Believe me, I have plenty of money to spend.
$15 for a protein shake that I can go make myself in the house.
It's like $60 and I get a month's worth of protein shakes.
So I was just blown away.
And mind you, there's a line out the door to buy protein shakes and they're picking them up two or four or six at a time.
But this is in downtown San Francisco in the financial district where they're probably buying it for corporate users or whatever.
So the store is packed and busy.
But I think when you look at those other companies, I think that those are all accurate.
I think that those are more realistic.
I mean, I'm like in a bubble.
Yeah, you are, Grant.
You're definitely.
I had one Joe the Juice.
I had just one because I was like $15.
Then they wanted me to put on tip on top of it, which I did for $2.
$17 for a prank check?
Give me a break.
I mean, that was just – keep on going.
That's insanity, yeah.
So the next slide is a little bit of hopium or just MSTR explanation for people.
So, you know, I've been bullish and bearish at times on MSCR, but I think it's important.
This is a slide from Aenea B.
He shows the reference of MSCR performance relative to Bitcoin over the last three years.
You can see that MSCR has outperformed Bitcoin over a very, very long time horizon.
That is true. I mean, it all depends on your entry.
It all depends on how much Bitcoin per share they've accreted for their shareholders.
This stuff really matters.
If you enter at a negative MNAV and the Bitcoin per share increases and they had a very small number of Bitcoin per share to start with,
you'll outperform Bitcoin. But the entry really, really matters. We're starting to get into value
territory, in my opinion, for MSTR, and I'll explain why. So this is a sheet that essentially
the entire MSTR business model, people like to say, there's no analysis anymore on MSTR,
which kind of frustrates me. MSTR is amplified Bitcoin. That's exactly what the executives of
the company are explaining to you. And you can quantify that amplified Bitcoin. Based on different
Bitcoin price growths, what does a 20 or 25% leverage ratio, I use 25 in this case,
What kind of amplification using perpetual preferred equities at about a 10% interest rate return to your shareholders in the form of Bitcoin per share?
So I'm using a kind of power law bull case model, 6.4x in Bitcoin over the next five years.
MSCR, based on my kind of modeling here, again, 20% expected, sorry, 25% debt to equity ratio on MSCR, common equity used to pay the PREF dividends.
all of the liabilities are prefs and Bitcoin is on this growth path. Assuming a 1.3 MNAV,
MSTR would perform at about 10.6x. So this is the power of the amplification. Everyone's saying,
you know, now like screw MSTR, it's only going down. Well, yes, it is only going down. But at
some point there will be a floor relative to Bitcoin. And once, if you're able to buy that
floor, the bull case is that you have now perpetual leverage that you own as a common shareholder.
And that is returned to you in the form of Bitcoin per share over a long period of time,
so long as Bitcoin continues to go up.
If you don't think Bitcoin will go up,
it will be levered to the downside as well.
MSTR is amplified or levered Bitcoin
with perpetual non-callable liabilities.
And that's the whole point.
And I think people are, it's that simple.
You can just do the math and figure out
where likely it'll be,
expecting different MNAS based on different Bitcoin prices.
So this is kind of the case for MSTR in this.
Now we're going to talk about digital credit.
And everyone says, screw the press, whatever.
The press are massively, massively important,
in my opinion,
for understanding the Bitcoin market
and how it's going to evolve. These credit products, if Bitcoin is successful, they will
also be successful. And I think they will help Bitcoin be successful. So this is just showing
the liquidity and the accessibility over time of the four different press, not including the
new Europref stream. We're going to jump into stretch, but I want Graeme to hop in and talk
a little bit about maybe your journey on the press screen. You're hating me. I was a bond trader.
I was a bond trader six months ago. And everyone's saying, what are you talking about?
Yeah, look, I'm not a bond trader.
I've never owned a bond in my whole life.
Look, I totally changed my mind on the prefs.
And I'll tell people why I changed my mind on the prefs.
And I think that's one of the biggest takeaways that you can determine if you think somebody has some form of mental flexibility.
My view on the prefs were, and this is two things can be true at the same time.
It is a perpetual liability paid timeframe infinity that's paid for by the MSTR common
shareholders.
That's my belief.
Is that true?
Yeah, it is true.
But then when I started thinking about this, I had a phone call with a few very special
people and what they explained to me, and Dan knew this and I told him in the future,
if I don't get something, you need to tell me, shut up and just listen.
What outweighs that is the fact that the refinancing never happens.
There's no refinancing event.
So if you stick that into a Gaussian-Brown model, the problem is in those models, it says, what's the term?
Well, the term is zero because it never refinances.
You're like, okay, well, I'm not going to use zero.
I'll use infinity.
Once you use zero or infinity in that mathematical model that's used for Monte Carlo simulations and Gaussian-Brown models, it breaks.
It just does not work.
So, I'll give you a good example of this.
If you buy a house and you own it outright, you have no refinance risk, okay?
It's permanent capital.
You bought that house, right?
You can stay in it for as long as you live, right?
You have to pay the utilities and your taxes.
But if the house is paid off, the utilities and taxes are a very small amount.
California taxes are 1% of the purchase price and they can go up a little bit each year,
right?
Does it suck to pay taxes?
Sure.
world works. So permanent capital, just like equity, and you have no refinance risk because
it's paid off. That's an equity. Now, could you borrow against it? Sure. And that's called a home
equity loan or a home equity line of credit. And you could borrow against it. And then, you know,
then you have to pay that back at some point. If you don't pay it back, when you sell the house,
it gets paid off. So the takeaway here from this is I changed my mind because once I realized that
There's no refinancing going on.
And you do not know what the interest rate's going to be in two years or five years.
You do not know what the ability to get capital is.
You don't know if they're going to change the terms, your ability to borrow, how you
look at it.
Are you credit worthy?
What's going to happen to your FICO scores?
Do you have a job, not have a job?
So once you take the refinance risk off of a bond and it becomes perpetual, then it changes
everything.
mathematically and also perception-wise.
So I've changed my view, how I view the prefs.
Now, has that had a detrimental effect
on MSTR common shareholders?
I've been vocal about this.
I think that they sold too many shares
with the 21 plan back in November of 24.
I've talked about this for six months, right?
And with that said, that's where we are today.
So stretch, I think stretch is the iPhone moment.
Let's jump right into stretch
because I think stretch is awesome.
And I'll say why.
Go ahead.
And I'll take it.
I agree, not really.
So I agree and we're jumping to stretch.
I don't like the term iPhone moment from the execs
because I don't think the company's going to have
this like crazy outperformance of Bitcoin
as a result of some sort of product
that is equivalent to the iPhone.
I think stretch has massive product market fit.
I don't think the common's going to go like double overnight,
but I think stretch will be very successful
and will be a huge product in the financial landscape.
So I think people,
you have to keep those two things in mind.
MSDR will perform. Wait a second, Dan. Let me go back to my Gen X date. When the iPhone came out,
it was despised for a bunch of reasons. And this is what happened in the olden days.
When the iPhone came out, it had no physical keyboard. First of all, that's the coolest thing
in the world because you can make a keyboard for any different language. It could be for,
it could be for obviously for English and you could also do a Chinese keyboard because it's
the virtual keyboard. Back in the old days before the iPhone came out, BlackBerry owned the market.
BlackBerry had proprietary servers. BlackBerry was sold to government because it was secure email.
iPhone, when it came out, was a retail device for kids that were downloading app that were playing
with useless apps. That's what it was for. Your kids used an iPhone, right? And who needs an iPod?
A BlackBerry is what's used for business and for the government.
So when the iPhone came out, most of the people that use BlackBerry says that's a toy.
And a BlackBerry had a physical keyboard, which people love pressing the physical keys.
So the iPhone basically, at that point, there's already been 100 million iPods that were already
shipped.
So the installed base went to this massive retail base.
And then years later, who's got a BlackBerry?
Nobody.
The RIM, R-I-M-M, was part of the four horsemen of the apocalypse.
If you want to talk about Jim Cramer before Fang, it was the four horsemen of the apocalypse.
And RIM was one of those companies.
Where's that company?
It's dead.
It got crushed.
Okay?
That makes sense.
So as this ramps up, it doesn't happen in one year.
Now, because the PREFs, there's no physical device to ship.
This could ramp up even faster.
This goes back to the analogy of AI.
Explain how that relates to this chart.
I mean, this chart kind of is illustrating that point, right?
Right.
So I posted a new pie chart showing, look, Jesse Meyer said there's $300 trillion of bonds.
Okay, $300 trillion of bonds.
If it takes 1% of that, it's $3 trillion.
dollars. Then the foreign exchange market, because you've got stream in it now, denominated in euros,
I calculated that to be $2.4 quadrillion. I'm not kidding. So as that goes up, it takes that
market on the foreign exchange market. Saylor talked about this today, stream being in Europe,
right? It's got a thousand basin points spread. It's the best carry trade ever. I didn't say it.
sailor said at the canter event yesterday the video got posted today i posted that who do you
think liked my tweet i'll just leave it like that so this over here let's go through stretch and why
why this is different than uh strife and and uh stream yeah yeah the other press i'll tell you
why i thought this was super cool this is what you see here is they have um due to the vwap they're
able to change the, they're trying to go for a fixed price, $100 par, which we all know.
And what they do is they have a variable interest dividend. So you see here, the rate has been
ramping up from 9% to 10%, 10.25%, 10.5%. Let's go to the next slide.
Here you can see the price. They've essentially gravitated the price using the increase in
monthly dividend payments right up to that par. And they're hitting the ATM right above $100
and normalizing, stabilizing that price.
I want to back up for a second
and be a little bit tough here.
You know, I got some crap from Andy Constant,
Damp Spring.
It's like, oh, they launched this at 90 bucks.
It trades down to 88
and there's this $10 spread from IPO
until it hits the $100 par.
And he's critical of this.
It's like, okay, you could launch this at $100, right?
And then you could go buy advertisement
to go get this, to go get the flywheel moving very quickly.
Or what you could do is you could launch it at 90 bucks
and tell people, look, par value is $100
and you'll make a little bit over 10%, 11%
to get it from 90 to 100 if you buy it now early.
And then that will evaporate once it hits par.
You don't wanna do the $90 launch.
Then you launch it at 100 bucks
and you go spend $50 million in advertisement
to get your message out there.
Which would you rather do?
I would rather them do it this way.
Totally agree, Grant. Totally agree.
And to that point, you just see the major brokerage platform growth over the last five years.
Obviously, Robinhood is just dominating the market in terms of retail trading.
You can see the volume tick up, partly seasonality, partly due to the listing on Robinhood of the preferred stocks.
I think that's a huge unlock.
And we're going to talk about that in a couple of slides.
But, Grant, maybe we preface, say what you're going to say about stable coins versus stretch, right?
I think I have a slide on that later in the deck.
Okay, we'll hold it off.
We'll save it for there.
This is just, yeah, I'm going to start, Grant, and then you finish here.
This is just the trading liquidity as a percentage of market cap.
So this is the liquidity or daily traded volume of each of these different stocks relative to their market cap.
Red are equities, MSDR, Tesla, and Apple for reference.
Again, that's a daily traded volume relative to market cap.
Stretch is here.
and then other comparable preferred equities are here.
So maybe, Grant, say why that's...
Yeah, so look, there's liquidity and then there's depth.
You could have something that changed back.
One of the hardest things for people to understand is volume in a given day.
Volume in a day, right?
Is it one share that trades 100 times back and forth
or is it 100 shares that trade once?
Or is it 50 shares that trades twice?
So when you look at this,
the trading liquidity as a percentage of its market cap, it shows you that Tesla, it's hard
to read, is 2.51% and Apple is 0.36%. So Tesla trades eight times as much as Apple. But if you
look at stretch already as a percentage of its market cap outstanding, it's 3.25%. It's basically
trading 10 times as much as Apple relative to its market cap. So it shows not only is it highly
liquid, it shows that there's greater depth given that the amount that's in here.
And somebody can say, well, Apple is such a huge company.
It doesn't matter.
Well, what it's showing here is that there's enough depth in this for it to go through
stretch to its market cap, where the volume can be that high because the pool is already
established.
Realize that stretch is the number one IPO 2025 for any stock, $2.5 billion.
That's an insane statistic.
Right.
Is it at $2.8, $2.9 billion now market cap?
Yeah.
Just for stretch.
So then you compare it against the other ones.
People are excited about it.
You know, the worst thing to have is a stock that doesn't trade.
The only time that's helpful, if you're Berkshire Hathaway A, and you trade 300 shares a day because the stock price is $700,000 a share.
That's the only time it helps you.
But in this case, the liquidity here and the depth is really important.
Exactly.
Especially for people who want to enter this in size.
These are institutional grade, investment grade, fixed income products that are fully liquid.
And that's what this is illustrating.
This is a real market.
You want 10% yield?
There will be buyers at $99.
That's what this is illustrating.
So you can go in there and be pretty, pretty confident that it's going to be staying at $100.
This is the price relative to the volatility.
The dotted line is the volatility.
You can see the volatility is coming down.
What is the point of stretch?
The point of stretch is to have a 1% annualized volatility between $99 and $100.
That's the point.
That's where strategy is trying to take it.
If they successfully do that, this will be a killer, killer product in the income market.
I like to say it's putting the S&P 493 out of business.
If your expected return is 8% annualized and instead you get a one with a 10 vol, you now are getting a product with a one vol that's giving you 10% where you don't pay taxes on the coupon payments.
That is a massive unlock.
If he's successful in pulling this off, which I believe in the growth rate of Bitcoin, I think he will be.
these products have massive implications for the broader market for those who understand it.
So I think we should go back to that other slide on the S&P 500 on the yearly returns based upon
what you just said. If Stretch is paying, right, Stretch is paying 10.5%, right? And no, go to the
right. Keep on going. I like how I'm going to the right. Right there. That's it. Right.
Right. Stretch is paying 10.5% return of capital. The S&P 500 blended average is 8.3%.
The remaining 493 is 6.3%. But all of these that you see here, right? If you sell this,
if it's more than one year, again, not financial advice, more than one year,
it's long-term capital gains. Less than one year, it's ordinary income taxes.
Stretch is 10.5% return of capital. The important thing, the difference between
Stretch and Misty, right? Misty was saying it has 89% yield, right? The problem was with Misty
is that the price has decayed significantly. It's one fourth of where it used to be.
Stretch is pegged at $100, right? And it's designed to save. Dan just said, look, there
are buyers that come in at 99 or 99.50, 99.75 at scale because they could buy this and they're
making, you know, a quarter, you know, 25 cents on a hundred bucks. And they could do that at scale
with automated trading to them. It's got a pegged price and it closes above a hundred bucks.
Right. And if it's paying you 10 and a half percent, right on a, think about this on a prep,
which is basically a perpetual bond. If a bond is paying you 10 and a half percent,
I know it's a perpetual prep and it's return of capital. Why are you in the other 493 blended
average of the S&P 500 to make from 6.3 to 10.5 as sailors say, well, you got basically 420 bips
there, 4.2%. And you don't have to worry about it if you entered at the wrong time. You know,
you're getting your 10% next year. Anytime. I am not a bond guy, but I never buy the 493.
You know, one of my best trades ever back in the old days was on Apple after they came out with the iPhone.
I thought that it was a great stock.
I still think Apple is a great stock, right?
Because they have a billion and a half iPhones out there, right?
So that's a great product.
So when you look at this, and Dan just said it's got lower volatility, which means that the volatility is even lower on stretch.
And it's going to still pay.
Oh, so let's say they drop it in the future from 10 and a half to 10 and a quarter.
Let's say they drop it to 10%, right?
Because they can do that.
So you only making 10 return to capital It doesn get you gotta I don know And by the way it pays the yield monthly and you don even need to think bitcoin going up they have 80 years worth dividend payments
so for anyone who wants to if you want it to outlive you it's good it's going to outlive all
of us so okay this this is the big thing here can i chime in on this slide yeah please please okay
look at this. Tether is tokenized U.S. treasuries at 4%. Now that 4% goes to Tether. It doesn't go
to the people that buy Tether. That's 4%. So Tether is $180 billion of Tether. Somebody can
say it's all FUD. Everything is always FUD, right? Tether has got whatever, $180 billion worth of
treasuries, right? Everybody knows that four times 18 is what? 72, right? Basically, they're taking
in $7.2 billion a year, right? In revenue, in treasuries, it's 4% on $180 billion, right?
They have 200 employees. They've got the most revenue per employee. And think about it.
They don't have a data center. They don't have a warehouse. They got nothing. They've got 200
employees, they probably have $100 million in servers. I don't say the fact they have nothing
like this is bad, is that they never have to replace a roof, you know, quote Grant Cardone.
They never replace a roof. Nobody trips over anything. It's like, it's not like they have to
build another warehouse that's a million square feet. And they're bringing in $7.2 billion a year
on 200 employees.
So Tether is tokenized U.S. treasuries.
What is strategy?
Stretch is equitized Bitcoin.
What did he do?
There's Bitcoin over there.
What did he do?
He wrapped it in a preferred equity, right?
That's what he did.
It's bond-like, but they basically wrapped Bitcoin
and he equitized it.
That's the cool part of this.
And he goes, by the way,
We're going to pay 10.5% to the shareholders that buy it.
If anything, you should call up Tether tomorrow and be like,
and I'm a fan of Paulo Adarnio.
I think the guy is great.
I would call and be like, you know, dude, you're making 4%
because I bought your Tethers.
You should give me back a 1%, you know, 100 bips.
Meanwhile, strategy is giving you back 1,000 bips.
They're giving you 10%, or it's actually 10.5%.
But they give you nothing.
So Tether, what they did is Tether built a great product.
That was for the rest of the world, right?
Because Tether, they're really not usable in the US.
So they went after the rest of the world.
Hey, you want to have access to dollars?
Great.
We tokenized US treasuries, which you could never buy by buying Tether.
But we're not going to give you the 4% that we get.
We're going to keep it.
Strategy, equitized Bitcoin.
Once you see that, you can't unsee this.
So now the question is, if you run this through AI, right, this is where Dan and I did this independently.
In the past four to five years, Tether has gone from $5 billion to $180 billion, right, even though it started 10 years ago.
So the crazy part about this is the CAGR is 90 – my calculations came back at 90%.
Yeah.
Your calculations were like 100%.
I indexed 2021, so same thing.
Right. So no matter how you look at this, STRC is basically going after the foreign exchange market, the treasury market, and the equity market. Those are all bigger, right, than what Tether is doing. And this is already easily buyable. It's already almost $3 billion.
So the growth rate for this can be, just pick your number, 20% CAGR, 30% CAGR, 40%.
I think the CAGR on this is higher than the CAGR of Bitcoin.
Would you agree?
I agree, yeah.
Tablecoins are massive, and this product is going to be massively adopted, I think, in brokerage accounts.
Let's just say it stretches around for five years, and the yield's still 8%.
Bitcoin's up, and there's now 100 years worth of dividends remaining.
You're going to buy that over every other bond, in my opinion.
So I just think it either works or it doesn't.
If it works, it's going to eat the market.
So most likely, if you run an 80% CAGR on this, if you just do the math on this, it's going to base.
There it is.
Yeah, this is just money market funds, fund assets.
Like this is the total addressable market for stretch.
And it has been at a 9% CAGR since 2015, the total money market funds.
and base case of 7% CAGR moving forward,
money market funds in 2030 could reach $11 trillion.
That is a pretty big addressable market
considering that stretch market cap is 2.8 billion.
And if Bitcoin is digital credit,
if it's pristine collateral,
if it's fully auditable,
then this is the future of money market funds.
And what I think is so interesting
is that moving forward,
you're going to be able to in real time
determine the risk of a product like stretch
based on the verified Bitcoin holdings of a Bitcoin treasury company.
Like, for example, strategy.
I know there's not on-chain reserves, but they're audited by Big Four accounting.
So you'll be able to tell like, oh, if Bitcoin falls by 20%, maybe the yield has to go up.
But like Bitcoin just stays within a 20% range up or down.
The risk profile of this product really isn't changing.
There's no earnings.
You don't have to wait for the earnings call and figure out if your bond's not going to get paid in five years.
Right.
You don't have to wait.
If the company gets sued, I mean, there could be potential liabilities there.
But you have the liquidation preference.
protecting in the case of liquidation.
So like there's a lot of investor protections that ensure you get that money,
that return of capital for the foreseeable future,
or you just get your money back.
Yeah.
So that's pretty,
oh,
let's go to,
let's go to stream and,
and we're,
we're cruising.
I mean,
we're going through a ton of slides.
So I think this is awesome.
Oh,
the European,
you take,
take it away,
Dan.
Sure.
Yeah.
I just looked at a couple comparable European bonds and we can first look at
Siemens.
I mean,
this is a $500 million euro.
So issuance in May of 2025, it's a 20-year fixed maturity, 4% coupon, 160 basis point spread relative to the 20-year swap.
In Europe, we use swap rates to benchmark the risk-free rate.
In the US, you use treasuries, whether it be UMass duration.
So for a perpetual product, the Macaulay duration based on a 9% yield is roughly 10-year duration.
But for a 20-year fixed rate bond, you're going to benchmark off the 20-year euro swap.
That's roughly 2.6%.
And what that gives you is 170 basis points spread.
And just showing you kind of what corporate bonds in Europe are trading at.
For reference, Stream was issued at a 12% or about a 950 basis point credit spread over the risk-free 20-year Euroswap.
And so you're getting this crazy premium relative to other corporate bonds.
You can look at the EDF green hybrids.
It's a perpetual security yielding 4.3%.
3%, same deal, 5.5-year non-callable at the beginning.
This is a BBB minus rated company.
There's no rating on this product yet.
But essentially what it's showing you is that these are premium issuers.
Strategy obviously is B minus rated by the S&P.
But the credit spread between any sort of BBB or AA- company between that and Stream is close to 800 basis points.
And that is just crazy.
So I think anyone who wants to make that trade should.
Stream is extremely mispriced, especially relative to other European bonds.
You can see all of these different ratings relative to other bonds in the market.
S&P rings, relative credit spreads, effective yield, and obviously the return of capital,
especially in a place like Europe where taxes can be pretty atrocious, is extremely attractive.
I'm just going to talk about why we use credit spreads and the swap rate.
So I'm going to slow it down really quick here.
I want to talk about how we benchmark these things.
So referred equity is essentially a bond.
Credit spread, it's a fancy word for the difference between the coupon payment on the bond and the risk-free rate.
So in the US, we use US treasuries as a risk-free rate.
You have to match duration.
So if you have a 10-year bond, you look at the US treasury 10-year rate, and that's the credit spread, the difference between those.
It's essentially the risk premium you're receiving for owning that corporate credit above what is a guaranteed payback by the US government.
So that's the credit spread in the US.
In Europe after 2008, sovereigns we saw could default.
And so you use the interbank lending rate denominated in euros as the benchmark for the risk-free rate in Europe, in euros.
So we use, it's called a swap rate.
So the euro swap rate is roughly 2.6% for a 10-year duration.
Obviously, you match duration to the perpetual liability.
We use a 10-year benchmark.
And this is how you determine the credit spread relative to the risk-free rate.
So just different markets.
It sounds confusing.
All these finance guys like to use complicated words for simple concepts.
So interest rate swap is exactly what we're looking at.
There's deep liquidity.
They're essentially risk-free.
In the US, we also have swap rates.
We have a interest rate swap and actually trade slightly below the risk-free rate because the government's been issuing so many short-term treasury bills into the market.
So that's another form of a carry trade is the difference in these swap rates and the risk-free rates in each jurisdiction.
This is illustrating that same thing I tried to break down.
It's a little bit confusing.
Again, when you think swap rate, think euro-denominated risk-free rate.
That's all you need to know because they differ based in different jurisdictions.
This, again, showing the credit spread, STRE yield while it's junior to STRF, so it should
trade at a slight premium to STRF in terms of the coupon payment.
It still has a higher credit spread at par than strife does to the risk free rate in
the US because the risk free rate in the US is higher than that in Europe.
So again, the overall concept here is that interest rates in Europe are lower than they
are in the u.s making strategies euro denominated products that much more attractive especially we
don't have to take on foreign foreign currency risk grant anything to say there anything talk
about let's go let's go back another slide here nope one to the right here or uh here
you're going so fast just go back one more to the left swap rates no one more
One more.
Okay, two to the right, three to the right.
Close enough.
Okay, look, these swap curves.
Look, I did a posting on this today.
I did this pie chart.
Look, Jesse Myers made this great chart that Strategy uses, that Sailor uses, the global
wealth.
The part that was left out of it, and this is no dig at Jesse, because at that point,
MSTR was only denominated in dollars and the prefs were all done
denominated in dollars. Once they announced stream,
and I thought that stream was going to be a Euro denominated version of
stretch, right? And that's not what it was.
It ended up being a Euro denominated version of stripe.
Now,
Now, it may go to $100.50.
It's going to have a 1% spread probably at most 50 bips up and 50 bips down.
Now, what does that mean?
They could trade that.
It's got a fixed price.
The other ones, the other prefs are floating prices with fixed yields.
The effective yield may be different, but they have a fixed yield.
So you have a chart that compares the two in one of the slides.
And so what happens is they're different products.
Now, when you have this credit spread that is shown on the previous slide there, what
happens is there's a difference between, as Dan said, the risk-free rate and what that
euro trades for there.
And so that's what Saylor talked about.
I reposted today.
What did I say about him?
He's at the Cantor event yesterday and he said, look, if you could borrow at 2% for institutions in Europe, right, and he's paying 12% on stream, it was in BIPs.
It's 10% that you're getting as a shareholder.
That's the spread that you capture.
And so that's why it's different in Europe because they've been reducing interest rates faster than in the U.S.
and the U.S. has higher interest rates.
So the effective ability to borrow money
is easier in Europe, right?
In a variety of reasons.
But the point here is,
is that things are different now.
Why are they different?
I did a post on the pie chart with Jesse Myers
where I was talking about on my long rant
and he made money be components in his original chart.
But money was only the deposits, right?
In the banks and cash and so forth.
What I added to my pie chart, this is the chart I wanted to get to.
This is where it says over here, the dividend type is fixed, but the price floats.
And the effective yield is, it's showing it here is 10%, but it could be a little bit,
the effective yield could be a little bit higher due to getting it to ramp up.
So my takeaway here is, is that he left out the foreign currency exchange because it was
not denominated, it was only denominated US dollars.
Now that we have stream, there's a 2.4 quadrillion foreign exchange market.
$2,400 billion is the foreign exchange market.
What I did is I took 10% of it, $240 trillion, because you need to have a base value to trade
it, and there's probably massive leverage on it.
So basically, in Jesse Meyer's chart, he said there was $300 trillion in bonds.
Well, I think there's at least $240 trillion worth of foreign currency swaps, which you could not do until STRE came available.
And this is where the presentation builds on itself, right?
This is what's different.
Tether is tokenized U.S. treasuries.
What strategy just did here with Stream, this is the key point.
What they did here is he equitized the euro swap.
That's the previous slide showing the credit spreads and the swaps.
He equitized this in a, in a prep that shows here that pays 10% and the effective yield
is higher and it's return of capital.
And if the S&P 500 is 8% and that's just a straight equity, this is a bond like perpetual.
This is where the presentation builds that never needs to be refinanced.
Things are different.
So stream and strife, now you have two different currencies.
Stretch is the 10-year number.
That's the 10-year, when you see that in the U.S., the 10-year rate, it's whatever, 4 point something percent.
That's what stretch is.
Stretch is a variable rate with a fixed price.
These are variable prices with fixed rates.
And now they've got this triangle.
maybe the triangle should be like this, where they trade. So this is why things are completely
different. Now, if this is complex, I get it. Look at some of my posts. We could do a space.
We could take questions on this, but this combining all of them together, strife,
stream, stretch. I do get that there's strike and stride, right? But these three are most excited
about are strife, stream, and stretch, right?
Because of the duration and then the payment schedule
on stretch being monthly, right?
Do I think that they should be paid in euros?
Heck yeah, absolutely, right?
Because then you don't have to deal
with the currency conversion.
I mean, folks, this is the trifecta right here
and it's gonna go to the quad factor.
And so if we model this against Tether,
these numbers, this should be able
to double every year, the prefs, in my view. And if the prefs are doubling, that means they're able
to acquire $8 billion this year in prefs. Next year, they acquire $16 billion in Bitcoin.
What's the price of Bitcoin? Don't know. Exactly. And that's the whole thing. And a lot of,
you know, people are like, the price is terrible. Look, I've been pretty vocal. I mean, I haven't
owned an MSDR since August. I've been, you know, buying the IPOs on the preferreds. That's been a
great way to make money. The SATA IPO over the past few days has been a great way to make money.
So the trades or the way to make money here, it's a lot more boring than it was.
Great. And we talk about it all the time. I wish we could just buy call options and make a gazillion
percent in four minutes, but that's not how we've been making money, right? We've been conservative.
We've been very risk averse, trying to buy these products at a discount, which we've been doing
successfully, clipping the coupons. There is money to be made here. It's just a different sort
of risk profile. And so we've been kind of tailoring our strategy to that. So I know a lot
of people listening are like, why are you guys talking about this? It's boring. It's like, no,
no, no, this is big for the Bitcoin market. These products have to succeed for MSTR common to
succeed. And then three, there are ways to make money in them, especially using leverage. So like,
that's why we're talking about this. And I encourage people who are pissed off the share
price to sort of pivot or to think differently about how you can use these products to create
portfolio. Yeah. Look, this has been complex. When you design a product, you look at the total
addressable market. That's why Saylor always used Jesse Meyer's Croceus BTC, his chart showing the
$300 trillion bond market, and they create the prefs. But now he's also going after the foreign
currency exchange market, right? And you're like, oh, wow. And then this is equitized Bitcoin,
and it pays this massive yield, which is better than Tether. Again, I have no gripes against
tether, but I think that this is a much different place. Now let's switch over to Seda. I mean,
we covered a lot in this presentation. There's a lot of information to think about, but we've been
doing this for years and it takes a lot, you know, changing your thinking is not something,
you know, when it happens, you're like, why didn't I get it before? Dan understood strike. I don't
know, four months before me, five months, every, I don't know. Every other day, Dan tells me
something about the press and I'm like, oh, I didn't know that. He's like, how did you not know
that? I'm like, I didn't know that. So anyway, I want you to think that when we go through this,
it's not like we read the prospectus and we get this all in the first read or the first three days
or the first week. Sometimes you change your mind three months later. And there's a lot of guys out
there who've like decided to use margin or take some sort of loan. I'm not advocating by any means,
but there are people making lots of money with these products And granted it takes a lot of to make money with these products but there interesting ways to do it Now we going to SATA Full disclosure I never held ASST never wanted to
I actually tried to short it.
Couldn't because the bar was so high.
Technically, this podcast is owned by
ASST, but we're supposed to say exactly how we feel.
That's how I feel.
The point being is I did
enter SATA both in the
hedge fund and then personally aggressively
because this product, the terms are just so good.
And we're going to talk, Grant and I, about why those terms are so good and why this PREF product is really in the investor's interest.
So obviously, ex-dividend date, that's really important.
So with stretch, you have to be holding stretch on the morning of the 15th every month.
You have to have it in your brokerage account to qualify for that month's dividend.
You can sell it after if you'd like.
Seda, they staggered with stretch.
So you have to be holding it on the 1st of every month to qualify for the dividend.
There is an opportunity to clip these dividends. Now, what is SEDA? So SEDA is essentially stretch,
a monthly variable rate perpetual preferred product, but it's senior, right? Stretch sits
below strife in the capital stack. Here, this is by the One Chair Podcast. Stretch sits below strife,
which sits below the converts. So stretch isn't that senior relative to the other securities in
the capital structure, right? Whereas SEDA is the uppermost security in ASST or Strives capital
structure. It is the senior claim. They can call it, they can redeem it at $110, just like Stretch
can be redeemed at a one-on-one. So there's more variability, but they pay out a 12% interest rate
at par at $100, whereas Stretch pays out 10% or 10.5%. So these are the comparisons. I really want
to break this down super, super simply. So again, stretch and SEDA are the two most comparable
kind of comparisons. So again, $100 per share par, liquidation preference set at $100. That moves up
to 101 for stretch and 110 for SEDA. 10.5% annual dividend payment at par versus 12% for SEDA.
Monthly payments, no cap on the rate they can adjust every month, no cap on that.
this is a really important covenant. So these companies can't change. They can't decrease the
interest rate on a monthly basis, more than 25 bps plus the SOFR change. So SOFR went down 25 bps,
they can adjust it down by 50 bps in a month. But the point being is, let's say there's a 10%
effective yield. Next month, they can't just drop it to 10% effective yield and just smoke you.
And the price declines, right? There has to be a gradual decline in interest rate. And it's
written into perspectives to protect investors. There's also a compounding cumulative dividend
clause, which means if dividends are missed, then the shareholders of these products are owed those
dividends and more as a penalty for missing them. If a certain amount of dividend payments are missed
by the issuing corporation, the holders of these preferred products can appoint board directors
to enforce dividend payments over a set term schedule. And then finally, you have the liquidation
preference. So if the company, in fact, winds up, ceases to exist, you are owed the unpaid
dividends and the principal, which is around $100 per share before anyone's junior in the
capital structure. So you get paid out much like a bond with the remaining assets of the corporation
before the common. That's why it's a less risky investment prospect. Can you go back one slide?
Look, this is something, when you look at this,
Stretch is getting its volatility reduced.
Dan put up a slide on it.
The volatility is whatever.
Five going to 3%, eventually going to 1%.
In order for SEDA, and I want to be very clear,
I don't own SEDA, I don't own Strive,
and we have no conversations with Strive.
We're allowed to say what we want to say.
I don't get paid by them, not contracted by them,
And I don't actually own any of the Stripe common stock or Seda.
But let's just look at it from my perspective.
What you see here is the target price range is $99 to $100 on stretch.
Seda is $95 to $105.
So it's $5 above $100, $5 below of the stated value.
Now, why do I think they did that?
It's because they're paying 12%.
They need a little more volatility in it to eke out a little bit more of that trading range to pay the 12%.
That's the way that I look at it.
They give it a wider range, right?
And the stated price is the same for both, 100 each.
But they give a wider range, but they're also paying a higher yield at 12%.
Now, 12% compared to 10% is a 20% difference, right?
But it's only 200 bps.
And so that's why I think it has the wider range there.
in order to pay that.
So for me, I think that you have to look at,
you know, the preferred market,
perpetual preferreds for equitized Bitcoin holdings
is less than a year old.
And this is the second company to do it.
So I think first mover advantage
is always critically important.
I think the second mover is critically important.
The fact that this was upsized from $125 million
to $2 million.
So I want all Bitcoin treasury companies to be successful.
But when I look at this product, I'm like, it is a little bit different than Stretch, which is a good thing.
And I think you have to look at why they did it.
And I think that in the short term, the effective yield is higher.
Exactly.
And there's two more interesting points from the prospectus that I want to mention.
So for Stretch, there can be no new preferred equity issued above Stretch.
So Strife sits above it, and then the converts sit above it.
They can issue more converts, but they can't issue any preferred equity above stretch.
SEDA in the prospectus, SRIVE is unable to issue any new preferred equity above SEDA.
So SEDA will be senior in the capital structure for the foreseeable future, barring any sort of converts, which they have said they won't do.
So these are important terms in the prospectus.
And it's really the reason why something like SRIVE is trading so terribly, right?
SRIVE trades terribly because it doesn't have cumulative dividends.
So there's no investor protections and they can issue as many preferred stocks above it as possible.
And the Bitcoin ratings are very low relative to other equities, preferred equities.
Strike, the same. They can issue as many preferred stocks above strike as they want.
And so strikes yield. The investor sentiment is reflecting that.
So there are protections in these perspectives that kind of provide a reason for why they trade like they do.
This is showing the target range. So anything above one of five is going to be decreasing the interest rate.
You're pretty much out at 105.
So I'm holding this thing big time right now.
And we can look at the price.
It's performed quite well in the past few days.
This is price, green candles.
At 105, you're out.
At 100, you're probably out.
But right now, the effective dividend yield is so high.
The reason it's increasing.
You have 30 years of dividend payments right now based on the Bitcoin coverage.
And that's if Bitcoin doesn't increase.
So you're going to get paid for the foreseeable future.
And then, you know, they likely will reduce that interest payment.
But this is sort of the mechanism for how they're going to keep it stable.
And this is important for understanding kind of where you should sell.
If it trades to 115, you're probably a seller.
If it trades to 85, you're probably a buyer.
That's kind of how I'm looking at these things.
So, you know, look, we've already started trying to figure out how to reverse engineer
how they're hitting the ATM.
I already did a post on it.
I would tell people to watch the last 10 minutes on every Friday.
If there's a dip down, then that means they probably did a closing trade to whatever amount
given their liquidity.
Let's just put a stretch for right now because it trades at par.
If you see on Friday, I already posted this.
If you see on Friday that on Friday, 10 minutes into the close, it goes from $100.10, it drops
down to $99.20, and then it closes out at $99.25 or $99.30.
That was the ATM.
At that point, they looked at all the information Monday through Friday, and they're like, how
much do we want to ATM and announce on Monday?
And they're like, let's just hit it right now, because they know it's trading whatever,
$100 million a day we talked about, and that's when they hit it.
So now, what does that mean?
Well, it's designed to trade at $100.
So it's really not like you could figure out how to trade around this unless you're moving
like a billion dollars in and out.
So it really doesn't really help you that much.
But what it is, is it's showing that it's receptive to keeping its peg.
And then the ID on Monday is that record date where you get into this and then they got
to maintain that that peg.
So if you see a dip and then Monday, it's back at $100 and 10 cents.
You're like, well, I met its peg.
They're going to pay you.
They're going to pay it out.
And then you think about it.
Now, I'm not giving any, no financial advice, but, you know, if you sell it, you don't get
to keep that return of capital.
It gets deducted off from what you bought it because, you know, you did that part.
But, you know, then you can go buy Seda and then try and clip another coupon.
I'm not saying that I would do this, but, you know, if it's in an IRA account, then
you might not care about the ROC dividend, you know, the ROC treatment because you're
not taxed in an IRA account.
I'm just saying that, you know, some people might look at something like that, but I don't know.
You know, it's.
And that's this kind of scheme.
Yeah, you can.
And this won't last forever.
Right.
How to fix income products typically trade.
They'll trade up during the period until the dividend, the ex-dividend date.
And then they'll trade down in a really efficient market.
They'll trade down the principal trade down the coupon payment.
So in stretch.
So in stretch is an efficient market.
Very mature market.
Right.
It's going to have to be a very mature market.
There's not ATMs, all this shit going on.
It should theoretically trade down on the 15th of each month by the amount that month the dividend payment is.
So right now it's about 0.85%.
So you should see a 0.85% drop on the 15th every day.
Right now it's not happening.
That's the inefficiency.
Right, right.
And the other part I want to say, this is why it's different than Misty.
Misty, I believe, is one-fourth of where it used to be.
And with this, with Stretch, it's designed to trade between 99 and 100, which is only a 1% down.
And then SEDA is going to have a wider range.
So from that perspective, that's where the foreign exchange comes.
Why can they trade $2.4 quadrillion?
I'm not joking.
It's $2,400 billion because it doesn't move that much as a percent.
I guess if you're talking about currencies like Argentina or Turkey can move a lot.
But if you're talking in dollars and in euros, they don't really move that much in a given day.
And that's why they have to take massive amounts of leverage in them or massive dollar amounts to generate a nominal yield.
The percentage is incredibly small.
So you got to do billions of dollars in order to make money on it.
So I think to wrap up what we did here, Dan, we covered what, 50 slides?
We did it in-
An hour and 12 minutes.
Hour and 12 minutes.
Look, I could do a space tomorrow.
We could take some questions.
I want to thank everybody for listening.
This stuff is, there's a combination here of-
There's some math involved in this.
It's understanding the difference between something has a fixed price and a variable rate.
Something has got a variable price and a fixed rate.
Different currencies come into it.
It's perpetual.
So that doesn't make a lot of sense because you're like they have a perpetual liability,
but they never have to worry about refinancing.
So then you have permanent capital because it's equitized, right?
So it's equitized Bitcoin, similar to Tether being tokenized treasuries.
So they're designed for different markets. And I think what we built here is I really think that in one year from now, digital credit is 2026. One year from now, people will be like, wow, I'm not a bond trader, but that was surprising that they raised.
I would have to guess that strategies guidance for next year has got to be the prefs have got to double in value next year with a raise, not not the value.
So if they're at $10 billion in prefs on December 31st, my belief is net new.
They have to have at least $10 billion in prefs and then the $10 billion in prefs that exist.
right? Obviously, stretch won't go up because the dollar amount's the same, but as they ATM that,
they can increase that by $5 billion. That's my thought. I know that there's limits in each one
of those that they come out with, but once they start changing those limits, that will change the
pressure on MSTR common shares. Everybody's going to be like, oh my God, you're so bullish on the
prefs. What about MSTR? Well, we have to have the prefs be successful. That runs up. They acquire
more Bitcoin by ATMing the prefs. Exactly. That's it. That's it. We're just trying to,
you know, we're not giving you the trade ideas. We're giving you the data and, you know, the
analytics on strategy. Like these are the products they're selling, right? You could say they're not
products, but they're financial instruments. You can make money, hopefully, in MSTR over the next
five years, you can also make money in these things and you can use them as parts of your
portfolio. You may not even want to touch the common, but even if you're bearish on the common,
you can still be bullish on the press because of the different investor protections. Much like
during a bear market, you'd want to be holding bonds, right? You won't want to be holding
common equities, but in a bull market, you want to hold common equities and bonds will underperform.
This is a story old as time. The dichotomy between owning a fixed claim over the assets, a senior fixed claim over the assets, and owning a speculative claim over future cash flows of the corporation. These are bonds versus equity. This is like capital markets 101, right? And people are freaking out. It's like, oh, we don't want to. These are high yield Bitcoin back bonds. They're incredible, right? I think they have huge implications for the Bitcoin market.
And then I want to leave you with another idea.
It's like, so, okay, Dan, so you got all these, Dan and Green, you got all these crazy pref products.
What do you do?
How do you create a portfolio?
Do they matter?
Right now, I'll leave you with my thoughts.
If I were a new market participant and I wanted to create a long on MSTR or a structured Bitcoin product, the two things I would do is I'd have a portfolio of largely strike and some strife.
And the reason I would do that is because there's a risk in strife in the capital structure
because it's senior.
If there's a zero interest rate environment, that price could balloon.
It could potentially push down the Bitcoin per share for all of the equities.
I'm not saying that'll happen at ATM a lot, but that's one risk.
Strike, on the other hand, is a really interesting product because you're getting this.
Graham, we talked to Tad a little bit sometimes, and he says, I love strike.
I get paid 9% annually.
It's a cumulative dividend.
So you have all those protections.
And you have this equity component baked into this product.
So you get paid to wait.
You also have a high yield.
And if strategy, MSTR, goes up, if Bitcoin goes up, that yield, that credit spread will
tighten.
So not only do you get the equity participation, you get the tightening of the credit spread.
So you get massive upside in the case that all this stuff goes in your favor.
So I really like strike over common at some of these really, really depressed prices.
Yeah.
Look, I can't disagree with what you're saying.
I think it all depends what your entry price is.
So I think for me, because I acquired so much MSTR back in late December 22 and January of 23, I have a very low entry price because they also did a 10 for one split.
So I had good timing on that.
With that said, I'm still sitting on a huge amount of that.
So I want them to be successful with this.
What do I think is going to happen next year?
I think they're going to come out with probably a euro stretch.
It just seems to make sense that the people in Europe want it because right now Stream gets paid quarterly, just like Strife does.
Those get paid quarterly.
So now they have a monthly.
Now, I think that they'd want to attack the money market funds in the euro.
So I think that a euro stretch would just be great.
Just do that and have it pegged at, you know, 100 bucks or 100 euros.
And that would be a great with a movable rate.
I think that that would be great.
They also hinted that maybe the Canadian market for Canadian dollars, right?
I think the Canadian market is kind of small, but if that's easy for them to do it because
the Canadians, maybe it's easier for them to buy US equities.
And maybe that makes sense because they don't want to have to deal with the currency conversion.
I'm not Canadian.
I don't live in Canada, but they already wrote this into their deck.
So I think Canada's on deck.
So I think they'll probably have a euro stretch.
they'll probably do Canadian dollars of these two also.
And I think combining that,
I think for them to give a forward guidance, right?
I'm just guessing.
It would have to double next year to be exciting.
And if these products do well through the end of the year,
what do we have left?
We've got today's November 12th.
We got what, 47 days to the end of the year or something, right?
And so I think that in that timeframe,
we're going to see how successful they are. And then they have to do their guidance, you know,
a month after this. So I think this looks great. The other thing is it looks like the shutdowns,
you know, I believe is probably ended tonight. I don't know. I haven't seen if the president
assigned it. I just want people to realize that the shenanigans on the shutdown, it's only extended
to January 30th, 2026. They're going to repeat the same thing. This is a continuing resolution
until they agree on appropriations, the pain will continue.
You'll have a continuing.
I hope they sign off on this.
I hope that this is stable.
The market does not like when the government is not functioning.
I don't care if anybody says, oh, the government's not functioning anyway.
It's not good for the government to be shut down,
to not have the data that comes out from the jobs reports and so forth.
But the takeaway is there's a lot of instability,
and people, when there's instability, tend to hold either cash and money markets.
We know that number $7 trillion in money market funds. And we know that people like bonds because
you get this typical coupon in a real bond or you get a yield with the prefs. So to wrap up there,
I want to thank everybody for joining. I know that this was a lot that we blasted everybody with.
We will post the deck. I want to thank everybody for listening. Dan, you have any final thoughts?
No, I'm glad we did that, Grant. We're just trying to keep it honest,
keep it simple and get the info out there. So thanks for listening, everybody. Appreciate all