[0:00] Well, well, well. Michael Sailor is back
[0:02] at it again. This time, potentially
[0:05] selling up to $1.25
[0:08] billion
[0:10] of Bitcoin in a new 8K just out. We've
[0:14] also got a revision to the stretch STRC
[0:18] policy. Boy, we've got a lot to talk
[0:21] about here. Let's first look at some
[0:23] price action. So obviously uh Bitcoin
[0:26] has come off of its uh last year highs
[0:29] pretty dramatically from that 126 had a
[0:32] lot of struggle bust to try to come back
[0:35] up here. We just really have not been
[0:37] able to recover. Uh and Micro Strategy
[0:41] the stock itself has essentially
[0:43] followed a similar pattern. Keep in mind
[0:45] the company has been issuing more shares
[0:47] of Micro Strategy to raise money. In
[0:50] fact, they just raised another billion
[0:52] dollars by issuing shares. You could see
[0:55] this right here. Look at this. During
[0:57] the period of June 22nd to June 28th,
[1:00] which is really just about a week, they
[1:02] raised another $1.1 billion by selling
[1:06] over 12.6 million of MSTR class A common
[1:12] stock. Mind you, on their Bitcoin right
[1:14] now, they're at over a $13 billion loss.
[1:17] So, we're clearly upside down on Bitcoin
[1:20] holdings over at Microsoft. But look at
[1:22] this. You can see here just over this
[1:24] last week, you get this sort of
[1:26] accelerated volume. See these higher
[1:28] volume candlesticks right here. A lot of
[1:30] this was actually just Michael Sailor
[1:32] hitting the sell button on Micro
[1:34] Strategy stock. Now, it's been very
[1:37] common for Michael Sailor to say, "Hey,
[1:39] I can raise an infinite amount of money
[1:42] uh by just issuing stock at Micro
[1:45] Strategy. I could always just issue
[1:47] stock and I don't have to worry about
[1:49] selling my Bitcoin because I could
[1:51] always just issue stock. So as a result
[1:55] we created all these different preferred
[1:58] options like stretch you know STRC the
[2:02] uh uh preferred perpetual preferred here
[2:05] where we'll just pay these cash
[2:07] dividends as long as you invest at this
[2:10] company that should be trading around
[2:12] $100 per share and you'll earn 10% on
[2:16] your money even though the company does
[2:18] nothing and it'll be funded by basically
[2:21] Bitcoin going up which is great when
[2:23] Bitcoin goes up and as usual terrible
[2:26] when Bitcoin goes down. And since
[2:28] Bitcoin has gone down, Strategy or STRC
[2:31] has now lost its $100 ideal trading
[2:36] level.
[2:37] And now Micro Strategy, Michael Sailor,
[2:42] starting to realize, wow, it's actually
[2:44] not that easy to raise money selling
[2:47] Micro Strategy stock because as soon as
[2:50] we go to sell a billion dollars worth of
[2:52] stock, we tank the stock price. In fact,
[2:56] literally on the 20 uh let's go to the
[2:59] day before on the uh yeah, okay, we'll
[3:01] go to the 18th over here. That's the
[3:02] trading day before. On the trading day
[3:04] before they started selling these 12
[3:07] million Micro Strategy shares, they
[3:10] closed at about $114
[3:12] per share. As they completed their
[3:15] offering uh on the 28th, which would
[3:19] basically be the open price here, they
[3:20] were down at $90. So basically to go
[3:23] raise $1 billion,
[3:26] they ended up having to decay their
[3:29] stock price by
[3:32] 21%.
[3:34] Think about that for a moment. They
[3:36] raised a billion at a $31 billion market
[3:41] cap company. At that point, it was about
[3:42] a $35 billion company. So they raised
[3:45] about $2.8%
[3:47] of the value of the company. They took
[3:49] 2.8% of the value of the company and
[3:50] turned it into cash.
[3:52] In doing so, they destroyed
[3:56] 21%
[3:57] of the value of the company. That means
[4:00] for every dollar that they raise in the
[4:03] stock market, they are burning about
[4:06] $7.5
[4:08] of corporate value. Think about that.
[4:11] I'm going to go raise a dollar. And in
[4:14] doing so, by raising a dollar, I am
[4:16] lighting an extra 6 and a half on fire.
[4:21] That sounds And that's exactly
[4:24] why Michael Sailor realizing that it's
[4:27] not that easy when your stock is
[4:30] plummeting uh to go to the market and
[4:32] say, "Hey, we want to sell more of the
[4:34] stock." Once he realizes, "Wow, it's not
[4:36] that easy to actually sell stock that's
[4:40] plummeting. You know, who wants to buy
[4:41] it?" What does he now announce? Uh, hey
[4:45] guys, we're actually going to have to
[4:47] sell Bitcoin. Here's the 10K from Micro
[4:51] Strategy. And they say right here, the
[4:54] company's board of directors has
[4:55] authorized a Bitcoin monetization
[4:58] program. Yes, we are now going to turn
[5:00] Bitcoin into fiat
[5:03] in which the company may sell Bitcoin
[5:05] from time to time for three purposes. We
[5:08] want to generate up to $1.25 billion of
[5:11] extra money so we can fund our USD
[5:13] reserve. Why do we need our USD reserve?
[5:17] Well, of course, to pay preferred stock
[5:19] dividends because the freaking preferred
[5:21] stocks are collapsing and we owe the
[5:23] dividends nonetheless. But of course,
[5:26] because there's so much pressure now
[5:27] because of these dividends and we
[5:29] promised we were going to pay so many
[5:31] dividends through the STRC perspectus,
[5:34] which I made a really big video on uh
[5:37] back in November. It was about 6 months
[5:39] ago. Uh and I said you should run away
[5:42] from this, that this was likely a Ponzi
[5:45] scheme. Uh in fact in our alpha reports
[5:48] which we release every single morning
[5:50] and uh every single morning the market
[5:52] is open almost every single morning the
[5:53] market is open unless I'm like on
[5:55] vacation or something like that. Uh and
[5:56] even then I still send send them out. At
[5:58] the very bottom I actually include a
[6:00] section where I call STRC a likely
[6:03] Ponzi. I am bearish Micro Strategy by
[6:06] default, but if I'm a 6 out of 10
[6:08] bearish on Micro Strategy, I'm a 20 out
[6:10] of 10 bearish on STRC. And I think that
[6:13] STRC will fail disastrously.
[6:17] So why did I think that back then? Well,
[6:20] I'll break it down to you. It's not just
[6:21] the fact that Michael Sailor now has to
[6:23] sell Bitcoin, which lowers Bitcoin
[6:25] prices in order to raise cash to pay the
[6:27] dividends, which were supposed to enable
[6:29] him to buy more Bitcoin through his
[6:32] preferred funds. It's not just that
[6:34] problem, but it is also the problem that
[6:37] Michael Sailor is now rugpulling the
[6:42] very dividend that he advertised. Take a
[6:44] look at this STRC dividend policy. The
[6:48] company announced a revised dividend
[6:50] policy for its variable rates series A
[6:53] per perpetual stretch preferred stock
[6:56] STRC stretch. Going forward, the company
[6:59] intends to evaluate the stretch dividend
[7:01] on a monthly basis based on basically
[7:04] how much it's sucking. So in other
[7:06] words, we won't necessarily pay a 10%
[7:10] dividend anymore. We might pay a lower
[7:13] amount or a different amount is the
[7:15] argument here. Now, why would they do
[7:18] that? So that they have to sell less
[7:20] Bitcoin. That's it. The whole goal is,
[7:23] hey, maybe maybe if we pay a lower
[7:25] dividend, we won't have to sell as many
[7:26] Bitcoin.
[7:28] Now, why is there a problem with STRC?
[7:30] Why did I say 6 months ago that this is
[7:32] a scam? Well, first of all, 6 months
[7:35] ago, they literally said right here, and
[7:38] nobody paid attention to it, except, you
[7:40] know, we talked about it, but most
[7:41] people didn't pay attention to it. This
[7:43] overall strategy also contemplates that
[7:46] we may periodically sell Bitcoin. They
[7:49] literally, like the attorneys were good
[7:51] at this. They told you they might end up
[7:53] having to sell Bitcoin.
[7:55] Like, that was obvious.
[7:57] But another thing that's pretty wild is
[8:00] when you look at the liquidation
[8:01] preference for this company, they argue
[8:03] that, oh well, you know, the liquidation
[8:05] preference for this company is $100 per
[8:07] share. So, you know, if we liquidate
[8:09] you, we'll pay you $100 per share. But
[8:11] that guarantee only works as well as
[8:16] they actually have money to pay the
[8:18] guarantee. It's not a guarantee, right?
[8:20] But they're basically saying, "Look, if
[8:21] we liquidate you, we'll pay you $100 a
[8:23] share." But I said that this is a scam
[8:26] because it's subject to their solveny I
[8:28] wrote. Okay. So what's their solveny?
[8:31] Well, it all comes down to the debt. And
[8:35] here I wrote down a quick little summary
[8:37] of where the debt is. STRC is junior to
[8:42] all liabilities of MSTR and STRF.
[8:46] So basically, every single dollar of
[8:49] debt that Micro Strategy itself has has
[8:54] to get paid first before STRC gets a
[8:58] dime. But the problem with that is Micro
[9:01] Strategy has way more debt than STRC has
[9:05] ever raised as a fund. That is scary
[9:10] because it basically means the
[9:11] liquidation preference means nothing.
[9:14] And so it's no surprise that now the
[9:16] stock is falling and people are like,
[9:17] wait, how is this possible? The
[9:19] liquidation preference, it's at $100.
[9:21] And again, I'm like, it doesn't matter
[9:24] because you have to compare it to the
[9:26] debt that Micro Strategy has. Look, STRF
[9:31] uh has about a billion.1 in debts and
[9:35] then you've got another about 8.24
[9:37] billion in aggregate indebtedness over
[9:39] at uh Micro Strategy. So when you add
[9:43] that together, you've got to get through
[9:45] almost $10 billion in actual debt before
[9:49] STRC has any money available to it. STRC
[9:54] right now has a market cap of about $4
[9:56] billion, which is remarkable that it's
[9:58] that high. But the point is there's
[10:00] almost there almost $2 worth of debt for
[10:03] every dollar of money that's sitting in
[10:05] STRC.
[10:06] And it's not even for STRC's purposes.
[10:10] It's just to bail out Micro Strategy.
[10:12] And Micro Strategy
[10:14] is actually up 8% today because of the
[10:18] idea that wow, maybe they'll have to pay
[10:20] fewer dividends. That's great. More cash
[10:22] for Micro Strategy. But let's not kid
[10:24] ourselves just because there's some
[10:26] enthusiasm intraday. Look at the overall
[10:28] trend for this puppy. The trend for this
[10:31] is driven by the fact that the
[10:34] underlying momentum thesis that Bitcoin
[10:37] will go up forever has broken. Now, does
[10:40] that make Bitcoin bad? No. I'm not here
[10:42] to dump on Bitcoin. I'm here to dump on
[10:45] Michael Sailor because I called this a
[10:47] scam in my opinion. You know, no
[10:48] guarantees, but I thought it was a scam
[10:50] day one. And I still think it's a scam.
[10:52] And so, it's not a surprise to me that
[10:54] now sell Bitcoin is turning into, well,
[10:57] when we sell Micro Strategy stock, we're
[11:00] actually losing $7.5 for every dollar we
[11:04] raise. This is stupid. Let's just go
[11:06] sell Bitcoin instead. Because when we go
[11:09] announce that we're going to sell a
[11:10] billion dollars of Bitcoin, Bitcoin goes
[11:12] down like 500 bucks or 1,000 bucks.
[11:15] Like, who cares? That's the idea is that
[11:19] they could actually cause less damage by
[11:22] selling Bitcoin. Now, hopefully for the
[11:25] Bitcoin fans, this is just part of the
[11:28] four-year cycle. Hopefully, this is just
[11:31] a down period where Michael Sailor says,
[11:34] "Hey, look, we're going to sell some
[11:36] Bitcoin just to kind of keep the company
[11:38] alive, to keep the preferreds going."
[11:41] Uh, we are, you know, after all, trying
[11:44] to quote unquote preserve long-term
[11:45] Bitcoin exposure. Uh, so we are going to
[11:49] preserve not selling our Bitcoin by
[11:52] selling our Bitcoin.
[11:55] Um
[11:57] maybe, but obviously they've signed
[11:59] themselves up for a whole lot of
[12:00] obligations. And I think if anybody
[12:03] needs to pray to the Pope or to wherever
[12:06] you pray, it's Michael Sailor. And he
[12:08] could always use the coupon code pope by
[12:11] going to meet Kevin.com, joining the
[12:13] courses on building your wealth, where
[12:15] you would have known 6 months ago that
[12:17] STRC, in my opinion, is a giant scam.
[12:21] Why not advertise these things that you
[12:23] told us here? I feel like nobody else
[12:24] knows about this.
[12:25] >> We'll we'll try a little advertising and
[12:27] see how it goes.
[12:27] >> Congratulations, man. You have done so
[12:29] much. People love you. People look up to
[12:31] you.
[12:31] >> Kevin Pra there, financial analyst and
[12:33] YouTuber. Meet Kevin. Always great to
[12:35] get your take.