Strive closed its $630 million gross SATS offering on Tuesday. It sold the shares at $90; SATS closed Thursday at $94.60. The fixed $15 annual dividend on $100 of stated value implies about 15.86% at that market price, down from 16.67% for a buyer at the offering price. SATA was $99.40 at the October 12 close, before Strive announced SATS, and $97.96 at Thursday’s close. That’s a $1.44 decline from the relevant starting point. Strategy’s STRC closed at $98.65, also below $100.
What interests me is whether investors are looking closely enough at the balance sheets behind those yields. At roughly $81,000 per bitcoin, Strive’s 36,818 BTC are worth about $3.0 billion against roughly $2.1 billion in SATA and SATS stated preferred claims, or about 1.4 times the notional. Strive says it has no debt. Strategy’s 848,517 BTC are worth about $69 billion against $13.6 billion in preferred notional and $6.7 billion in debt, or about 3.4 times those combined obligations. That is a much thicker asset cushion at Strategy on this simple measure. These preferreds are corporate claims rather than direct liens on bitcoin, and cash reserves and seniority matter too. Within Strive, SATS pays a higher fixed rate but sits behind SATA. I see the appeal of its yield while SATA trades below par, and I wonder how many buyers have done that credit work.
My friend Chase Palmieri has been getting great guests on RE:Bitcoin to work through exactly these questions. In his conversation with Strive CEO Matt Cole, Cole described high-net-worth individuals as likely important buyers of SATS. I suspect retail appetite matters, although the price tape doesn’t identify the holders. Chase also had Strategy’s CJ on. CJ described institutional feedback that another STRC rate increase might add little demand and could signal distress. I wonder whether income-seeking individuals see that differently. Strategy spent $193.1 million buying back STRC in the week ending October 18, and its board expanded the repurchase authorization for its digital-credit securities to $3 billion, with $1.16 billion still available at that date. STRC remains under $100. At some point, a security has to find buyers who want to hold it without the issuer constantly supporting the price.
I hope bitcoiners buying these securities understand the trade. You can hold bitcoin yourself and, if you can manage the collateral risk, borrow against it or sell small amounts to fund spending while keeping the upside on the bitcoin you still own. The preferreds give you income and leave that capital management to Strive or Strategy. In return, you accept issuer risk and a dividend rather than direct exposure to bitcoin’s full upside. I understand why both companies are doing the hard, expensive work of building a track record for bitcoin-treasury finance. I still want investors to ask whether they need a financial product to own bitcoin’s upside.