Strategy, ticker MSTR, is one of the most unusual companies in the public markets. It does not make a product or sell a service in any conventional sense. It exists to buy and hold Bitcoin, and it has become the largest corporate holder of the asset by a wide margin. That single fact explains both its spectacular returns and its violent drawdowns, and it is the context you need before looking at any of its securities, including the 12% preferred at the center of Nick Giambruno’s Financial Underground pitch.
What the Company Actually Is
Strategy began life as MicroStrategy, a business-intelligence software company, and it still carries a modest software operation on the books. But under the direction of Michael Saylor, its founder and chairman, the company made a decisive bet in 2020: it would convert its corporate treasury into Bitcoin.
The strategy, if you will, is to use the company’s balance sheet and its access to capital markets to accumulate Bitcoin faster than any individual investor could. It raises money by issuing debt and equity, buys Bitcoin with the proceeds, and lets the appreciation flow to shareholders. It is, in effect, a publicly traded proxy for Bitcoin with a corporate structure bolted on.
Why the Common Stock Is So Volatile
Because the company’s value is dominated by its Bitcoin holdings, MSTR common stock trades like Bitcoin with extra amplitude. When Bitcoin rises, the stock tends to rise by more, because the market prices the treasury at a premium to its underlying holdings, a premium that reflects the scarcity of a liquid, regulated way to get Bitcoin exposure in a brokerage account.
The flip side is just as real. When Bitcoin falls, MSTR falls harder, and the premium can compress. This is not a diversified company with a stable earnings stream; it is a concentration in a single volatile asset. The promo itself is careful to pitch the preferred stock, not the common, precisely because the common is too volatile to serve as an income vehicle.
The Funding Machine
The mechanism that lets Strategy keep buying Bitcoin is its access to capital. It issues convertible bonds, common stock, and a family of preferred shares, all of which raise money that goes straight into Bitcoin. As long as investors are willing to fund the treasury, the machine runs. When enthusiasm fades, or when Bitcoin’s price falls far enough, the cost of that funding rises and the machine slows.
That is the dynamic worth watching more than any single quarter. The preferred securities, including STRC with its 12% yield, are a direct product of this funding machine, which we explain in our MicroStrategy preferred stock explainer.
How to Think About MSTR
There is a defensible bull case and an honest caution, and both deserve to be stated plainly. The bull case is that Bitcoin is scarce, the company holds more of it than anyone, and a regulated vehicle that gives mainstream investors exposure has real, durable value. The caution is that you are not buying a business with cash flows, you are buying an asset concentration with a funding cycle attached, and the ride is brutal in both directions.
For an investor who already believes in Bitcoin and wants the most direct public-market exposure, MSTR is arguably the cleanest way to express that view. For an investor who wants income from the same thesis with less day-to-day volatility, the preferreds, and especially the senior ones, are the more measured version. Our STRC explainer covers that trade-off in detail, and our bitcoin treasury stocks explainer puts the whole category in context.
The Premium Question
The most debated number around MSTR is the premium: the gap between the company’s stock-market value and the market value of the Bitcoin it actually holds. At times the stock has traded at a healthy premium to its underlying holdings, at other times near or even below that value, and the premium is the market’s collective judgment on Saylor’s strategy and the funding machine.
A premium can be justified. The company offers regulated, liquid Bitcoin exposure with custody and tax handling built in, and its access to capital markets lets it accumulate faster than a buy-and-hold investor could. But a premium is also a vulnerability, because it can compress quickly when enthusiasm fades, when Bitcoin corrects, or when cheaper ways to get Bitcoin exposure appear.
For a long-term holder, the premium matters less than the direction of Bitcoin itself. For a trader, it is often the whole game. Knowing which kind of investor you are decides whether the premium is noise or signal, and that self-knowledge matters more than any single price. It is also why the preferreds, which trade on yield rather than premium, appeal to a different kind of buyer entirely.
Ready to see the research? Click here to access Nick Giambruno’s report.
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