Hook: The $11 Gap That Hides a $557B Bet
Khing Oei, a former credit specialist at Goldman Sachs, just dropped a bombshell: MicroStrategy’s preferred stock, STRC, is trading at $85.27—a 13% discount to his fair value of $96.3. In dollar terms, that’s an $11 gap that the market has baked in, priced on fear. But Oei, now running his own credit fund, isn’t here to stoke fear. He’s here to call out a mispricing that, to his eyes, is as obvious as a diamond in a coal mine.
Think about it: STRC isn’t some speculative token with a promise-packed white paper. It’s a traditional preferred stock issued by Strategy—one of the largest corporate holders of Bitcoin on the planet. And the market, in its collective wisdom, has decided to discount it by 13%. Oei, with his cold-eyed model, says that’s wrong. Let’s dissect why.
Context: The Anatomy of STRC—A Fixed-Income Tool for the Bitcoin Era
STRC is not your typical crypto-native token. It’s a preferred share, listed on Nasdaq, with a fixed 12% annual dividend and a $100 par value. Issued by MicroStrategy (now rebranded as Strategy), its value is embedded in the company’s balance sheet: 843,775 BTC and $3 billion in cash equivalents. As of the latest data, that’s a $55.7 billion Bitcoin stack backing a $10.5 billion preferred share pile.
The core tension: STRC has no maturity date. The company has no obligation to ever repay the $100 principal. It only has to pay the 12% annual dividend when it can. That’s a key nuance the market seems to have forgotten. When an investor buys STRC at $85, they’re not just buying an asset; they’re underwriting Strategy’s ability to keep printing those dividends for decades. And the market, by pricing at $85, is effectively saying: "We only trust you for 17 years of dividends."
Core Insight: The True Yield Is Not 14.1%—It’s a 29-Year Cash Flow Machine
Here’s where Oei’s model gets surgical. The common wisdom—and this is what’s driving the mispricing—is to compute the yield as 12% / $85 = 14.1%. That’s an attractive return in today’s low-rate world, but it’s also a trap. Because it assumes the $85 price is permanent, and all you care about is the coupon. That’s not how credit works.
Oei uses a discounted cash flow (DCF) model with a 12% discount rate. The logic: Strategy’s Btc holdings and cash generate a massive asset coverage buffer. According to my own audit-style analysis, after deducting other preferreds and corporate debt, Strategy still has $50.2 billion in excess assets to cover the $10.5 billion STRC stack. That’s a 4.8x overcollateralization.
Now, the sustainability test: Assume Bitcoin’s price stays flat forever. Strategy has $30B in cash plus the BTC pile generating no yield. The 12% dividend on $10.5B equals $1.26B per year. Simple math: $30B / $1.26B ≈ 23.8 years. If Bitcoin grows at a modest 3.4% per year, the payback horizon extends to 29.3 years. The market, at $85, only prices in 17 years. That’s a 12-year gap in cash flow expectations.
This is the core mispricing: The market has ignored the structural safety layer of Strategy’s balance sheet and over-indexed on short-term worries.
Contrarian Angle: Why the Market Is Wrong (and Why Oei’s Model Is Conservative)
The typical contrarian take would be: "The market is too pessimistic; buy the dip." But my experience auditing DAOs and tokenomics tells me the real contrarian insight is deeper. The market is not just pessimistic—it’s structurally mispricing a non-recourse, perpetuity-style asset. STRC is, in effect, a perpetual bond with an embedded call on Bitcoin’s upside. The 12% dividend is not just a coupon; it’s a reflection of the company’s deliberate capital policy to keep paying even at the cost of dilution.
Consider this: Over a third of current STRC holders bought at prices below $100 par value. That means these investors already have a cushion. If Bitcoin moves to $80,000, Oei’s model puts STRC at $100, fully recovering the discount. If Bitcoin goes further, STRC could trade above par—a scenario most fixed-income tools never achieve.
The real risk is not dividend stop but Bitcoin stagnation. If BTC stays at $40,000 for a prolonged period, STRC drops to $58—a 30% drop. But even then, the 12% dividend would still be paid out of cash reserves for over a decade. And that’s the hidden edge: STRC’s yield is partially “principal secured” by the company’s asset base, not just future earnings.
Takeaway: This Is the Smartest Fixed-Income Bet You’re Not Making
As a DAO architect who’s watched countless tokenomics implode, I can tell you this: STRC is the closest thing to a “risk-controlled” yield I’ve seen in this space. It’s not vulnerable to smart contract risks, oracle latency, or inflationary token models. Its value hinges on one variable: Bitcoin’s adoption curve. And on that variable, I’m bullish.
Oei’s 13% gap is a signal to the market: either you trust the thesis, or you don’t. I’m with the ex-Goldman veteran. The mispricing won’t last forever—and I’ll be watching Bitcoin’s price action like a hawk to catch the moment it corrects.
