The preferred shares market just got its long-awaited innovation, and it is reshaping the market altogether with Strategy Variable Rate Perpetual Stretch Prf Shs Series A ($STRC). | Strategy Shares Series A is the first U.S. exchange-listed perpetual preferred security issued by a Bitcoin Treasury Company, Strategy™, to pay monthly dividends with a board-determined monthly dividend rate policy. Trading under the ticker $STRC, these shares represent Strategy's attempt to bridge two worlds that rarely intersect: the volatile nature of cryptocurrency and the stability sought by fixed-income investors. |
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| | How It Works | In July 2025, Strategy offered its first-ever, one of the biggest IPOs of 2025, worth about $2.5 billion. The structure of the share is simple, yet complex. STRC will retain a $100 par value, with no expiry or buyback obligations, but shareholders can trade it on the exchange. In return, STRC pays monthly cash dividends, currently at an annual rate of 11% for January 2026. | But here's what makes it interesting: that yearly rate isn't fixed. The dividend rate automatically adjusts monthly to encourage trading around the $100 par value, aiming to help reduce price volatility. |  | How STRC works |
| This offers a self-correcting mechanism: if the share price trades below $99, the dividend rate increases, making it more attractive and, in theory, pulling the price back up. If it trades too high—let's say above $101—the rate decreases, cooling demand. The rate decreases are capped at 25 BPS + SOFR adjustments per month, ensuring the rate cannot drop below the monthly SOFR rate. |
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| Other Key Features | Bitcoin-backed securities: What sets STRC apart from similar preferred stocks is that its preferred shares are backed by Bitcoin at a 5-to-1 ratio, meaning every $100 share of STRC is backed by $500 of Bitcoin. Strategy raises capital by selling shares and investing it in Bitcoin, so even if Bitcoin prices fall, overcollateralization acts as a cushion. The "Stretch" feature: STRC implements Stretch, an innovative liquidation preference that ensures even if STRC trades above $100, your liquidation preference "stretches" upward with it, protecting gains even in a liquidation scenario. Cumulative dividends: If Strategy™ misses a payment, the cash dividend accumulates and must be paid before any distributions to common shareholders. If the board fails to pay the accumulated dividends on schedule, additional "compounded dividends" accumulate on the unpaid amounts, compounded monthly at the regular dividend rate.
|  | Monthly dividend history of $STRC |
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| | Key Risks | STRC offers compelling yield, but it comes with a fair share of risks. While it positions itself as a valuable alternative to bonds and other fixed-income securities, STRC remains untested in the market. | Bitcoin volatility is a risk. If Bitcoin falls below 80%, the collateral value could fall below the share value. While this is not unprecedented with digital assets, it is still a risk. While the variable dividend mechanism is designed to keep STRC near $100, there is no guarantee it will maintain that price. A decline could result in capital loss. While STRC currently pays an annual dividend rate of 11%, that rate can decrease if SOFR serves as the floor, which is currently 4–5%. STRC is less than a year old, and its trading volume may be limited compared to established preferred shares. During market stress, bid-ask spreads could widen significantly, making it difficult to sell at fair value. Future regulatory changes to Bitcoin could significantly impact the stock, including changes in tax treatment of its dividends.
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| | The Bottom Line | STRC is an ambitious financial engineering instrument that is the first of its kind, attempting to deliver stable income from an inherently unstable asset. STRC is a genuine pioneer in combining specific features, such as a U.S. exchange-listed Bitcoin Treasury Company that pays monthly dividends at variable, board-determined rates. | For income investors willing to trade Treasury-backed stability for significantly higher yields while tolerating Bitcoin exposure, STRC offers an unprecedented instrument. But remember: innovation in finance often means you're paying for the privilege of discovering which risks the market hasn't priced in yet. |
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| | | | | Important disclosures: This newsletter is provided for informational purposes only and does not constitute investment advice. All investments involve risk, including possible loss of principal. Please consult with your financial advisor before making investment decisions. |
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