Long-Term Notes
Combined notes: This company issues self-balancing perpetual preferred stock, currently paying a 14% dividend, distributed daily. The business model is basically borrowing money at 14% to go long Bitcoin and betting that Bitcoin appreciates faster than that. I am not bullish on it. | But the opportunity I want to exploit is premium compression. It is currently 0.85. I do not think a high premium is sustainable over the long run, because when the premium is high, the company has an incentive to issue into it.
Stock communities:
- Reddit。
- Seeking Alpha comments.
Signals that I am wrong:
- Common Residual mNAV keeps expanding instead of mean-reverting
- Common Residual mNAV does not expand, but my portfolio strategy still loses money.
Key Thesis
2026-06-10 ASST BTC Premium Compression Pair Trade
How to calculate the premium. There are all kinds of different methods. It took me forever to understand them. What a headache.
- Equity BTC mNAV = Market Cap / BTC NAV
- It does not subtract debt, preferred stock, or convertibles, so it can be misleading under a complex capital structure.
- # For example, suppose a company has a $1B market cap and $10B of Bitcoin, but owes $20B. A -0.9 premium would be very misleading in that case.
- # This is very misleading, but it is the version circulated most widely in the market.
- EV mNAV = Enterprise Value / BTC NAV
- Enterprise Value = Market Cap + Debt + Preferred Stock - Cash
- Common Residual mNAV = Market Cap / Common Residual NAV
- Common Residual NAV = BTC NAV + Cash + Other Assets + Operating Business Value - Debt - Preferred Stock - Other Senior Claims
- # The most reasonable one.
- Option-adjusted Common Residual NAV = Common Residual NAV adjusted for convertibles, warrants, options
- # The most, most reasonable one, but it may not always be easy to calculate.
Major Bitcoin treasury companies
| Company | BTC | BTC NAV | Common Market Cap | Net Senior Claims | Equity BTC mNAV | Common Residual mNAV |
|---|---|---|---|---|---|---|
| Strategy / MSTR | 845,256 | $52.24B | $41.3B | $21.2B | 0.79x | 1.33x |
| Twenty One / XXI basic | 43,514 | $2.69B | $1.90B | $0.49B convertibles | 0.71x | 0.86x |
| Twenty One / XXI diluted/conversion | 43,514 | $2.69B | $3.51B | About $0 if converted | 1.31x | 1.31x |
| Metaplanet | 40,177 | $2.48B | $1.6B-$1.9B | Data sources disagree substantially | 0.64x-0.75x | About 0.79x-0.95x |
| MARA | 35,303 | $2.18B | $4.9B | About $2.8B net claims | 2.24x | Not suitable for a direct calculation |
| BSTR | 30,021 | $1.86B | Not completed / no stable traded market cap | — | — | — |
| Bullish / BLSH | 24,300 | $1.50B | $3.1B-$4.1B | Operating company; the metric is not clean | 2.0x-2.7x | Not suitable for a direct calculation |
| Strive / ASST, Class A only | 19,032 | $1.18B | ~$0.87B | ~$0.56B | 0.74x | 1.42x |
| Strive / ASST, all common | 19,032 | $1.18B | ~$1.12B | ~$0.56B | 0.95x | 1.83x |
Detailed calculation.
Common Residual NAV
≈ BTC NAV + Cash + STRC - SATA Preferred
≈ $1.174B + $0.139B + $0.047B - $0.751B
≈ $0.609B
Common Residual mNAV
≈ $1.12B / $0.609B
≈ 1.83x
What I specifically want to achieve: do not bet on BTC direction. Only bet on ASST's Common Residual mNAV reverting from 1.83 to 1.
- BTC beta neutral pair trade
- BTC beta ≈ BTC NAV / Common Residual NAV
- ≈ 1.176 / 0.611
- ≈ 1.9x
- Short ASST common: $20k
- Long BTC: $38k # 1 to 1.9
Model the two legs at $100k combined.
| BTC move | Premium goes to zero, mNAV 1.00 | Premium is cut in half, mNAV 1.41 | Premium unchanged, mNAV 1.82 | Premium +50% mNAV 2.23 | Premium doubles, mNAV 2.64 |
|---|---|---|---|---|---|
| -40% | +$3,729 | +$1,864 | $0 | -$1,864 | -$3,729 |
| -30% | +$6,681 | +$3,340 | $0 | -$3,340 | -$6,681 |
| -20% | +$9,632 | +$4,816 | $0 | -$4,816 | -$9,632 |
| -10% | +$12,584 | +$6,292 | $0 | -$6,292 | -$12,584 |
| 0% | +$15,536 | +$7,768 | $0 | -$7,768 | -$15,536 |
| +10% | +$18,488 | +$9,244 | $0 | -$9,244 | -$18,488 |
| +20% | +$21,440 | +$10,720 | $0 | -$10,720 | -$21,440 |
| +30% | +$24,392 | +$12,196 | $0 | -$12,196 | -$24,392 |
| +50% | +$30,296 | +$15,148 | $0 | -$15,148 | -$30,296 |
The swings look pretty small. | Small surface-level volatility does not mean low risk. The risk is concentrated in a few places:
- 1. Common Residual mNAV suddenly expands
- 2. ASST short borrow cost / recall / hard-to-borrow
- 3. ASST squeezes and the stock temporarily disconnects from residual NAV
- 4. SATA or ATM financing changes the capital structure and breaks the hedge ratio
- 5. A sharp BTC decline thins residual NAV and causes ASST common beta to change abruptly
If you want to make the strategy more stable, you should recalculate dynamically:
- Hedge ratio = BTC NAV / Common Residual NAV
Backtest data.
| Start | Start Common Residual mNAV | P&L to Now | Return on Gross |
|---|---|---|---|
| 2025-09 | 2.17x | +$5,742 | +5.7% |
| 2025-10 | 1.24x | -$17,377 | -17.4% |
| 2025-11 | 1.83x | -$17,678 | -17.7% |
| 2025-12 | 1.24x | -$31,125 | -31.1% |
| 2026-01 | 1.49x | -$20,484 | -20.5% |
| 2026-02 | 0.91x | -$33,396 | -33.4% |
| 2026-03 | 1.11x | -$24,035 | -24.0% |
| 2026-04 | 1.42x | -$9,650 | -9.7% |
| 2026-05 | 1.57x | -$1,290 | -1.3% |
What matters is how the Common Residual mNAV premium changes afterward.
Capital usage also needs to be considered, since the long leg is larger.
2026-06-11 SATA Box-financed Carry Trade
Roughly: buying SATA currently yields 14% annualized. A box spread loan currently costs 4.3% annualized. That extra interest actually proves what the market thinks. If you think the market is wrong, there is a good chance you are the one who is wrong. | That may sound a bit extreme. The risk is basically that the Ponzi scheme collapses. But what if I have an indicator that can warn me before the Ponzi collapses?
An indicator for predicting the collapse. Current Common Residual mNAV Premium = 88%. That means this company is still hot and there are still plenty of idiots willing to buy it. SATA looks very safe right now. Cash alone can cover 1.5 years, never mind that the company can sell Bitcoin to pay. I think that if SATA is really going to collapse, the Premium must start falling long before that happens. I think this is a very early indicator. As soon as I see it appear, I will cut the position immediately, then stop completely at some conservative threshold. This Carry Trade feels profitable.
How would a SATA collapse happen? SATA itself crashes in value. The company pauses dividend payments - contractually, they must be made up later. The company cuts the dividend rate - it is adjustable monthly, and the contract limits how quickly it can be reduced = 0.25% + SOFR Delta. | At roughly $29.7k BTC, preferred asset coverage approaches 1.0x.
- Path 1: BTC crashes and expected asset coverage is breached
- Path 2: the market stops believing that the 13% daily dividend is sustainable
- Path 3: the daily dividend is deferred
- Path 4: the ASST common premium disappears and the financing machine stops
- Path 5: issuing more SATA actually reduces asset coverage
Fill in the gaps.
- If SATA is going to collapse, the Premium must fall first. | That is not necessarily true. There are several possible counterexamples:
- BTC falls quickly and SATA gets repriced for credit risk first;
- The company's monthly rate notice disappoints and SATA falls first;
- After SATA falls below $95, the market decides the financing machine is broken, and only then does the common premium change;
- When liquidity is poor, SATA and ASST can gap at the same time, leaving no time to exit along the premium ladder.
There are actually two trades here.
- Trade A：short ASST common + long BTC
- Bet that the Common Residual mNAV premium compresses
- Trade B：long SATA + box funding
- Bet that SATA stays near par and the dividend keeps getting paid
Watch these risk indicators.
- 1. SATA price < $95: reduce the position / stop adding
- 2. SATA price < $90: treat the thesis as broken, not as normal volatility
- 3. SATA dividend rate does not rise as the price falls: dangerous
- 4. ASST Common Residual mNAV keeps compressing: reduce SATA; do not wait for 50%
- 5. Asset coverage < 1.5x: reduce the position
- 6. Asset coverage < 1.25x: forced exit or keep only a tiny position
- 7. BTC quickly breaks below $45k-$50k: recalculate; do not wait for monthly data
- 8. ASST/SATA ATM cannot sell or issuance happens at a discount: dangerous
- 9. Cash + STRC dividend reserve falls below 12 months: dangerous
- 10. The company starts deferring dividends: thesis broken immediately
The previous break below $93. Cause: Bitcoin fell + ATM offer
Current plan: use a box spread and SATA for a 10% long position, targeting twice the total size of the ASST Pair Trade. It may grow as the Premium rises. If the Premium starts falling, shrink the position. If the Premium falls to 50%, stop immediately.
Study Notes
Online Thesis
2026-05-31 BBM video
- 14% preferred stock. That is equivalent to borrowing at 14% to buy Bitcoin, then hoping it appreciates faster than 14%.
- Interesting, but I feel what he says is either not workable or incomplete. At minimum, he did not hedge out Bitcoin's volatility. Holding the corresponding Preferred Stock also carries additional risk.
- - - - My own research starts below.
- Using the two methods I calculated, ASST's premium is 0.85. I am thinking about shorting ASST and going long a Bitcoin ETF.
- The Premium is currently 85%. I plan to open a position with both legs totaling 2% and see how it goes. If the Premium keeps expanding, I will keep adding.
2026-06-18 BBM video
2026-07-01 BBM video | MicroStrategy Forced To Fire-Sell Bitcoin As Ponzi Scheme Implodes
- MSTR average Bitcoin cost = 75k.
Time-Sensitive Notes
Created note
| Stock | ASST | |
|---|---|---|
| Latest financial report | 26Q1 | |
| Current share price | 14.06 | |
| Diluted Shares | 79.19 M | |
| Market Cap | 1.11 B | |
| Revenue | 5.73 M | |
| Earning | -694.3 M | |
| PS | 194.31 | |
| PE | -1.60 | |
| Cash | 95.09 M | |
| FCF (-SBC) | -100.8 M | |
| Cash Runway | 0.94 | |
| Dilution, 3 years | 821.00% | |
| Dilution, 1 year | 9298.00% | |
| Short Float % | 22.32% | |
| Days to Cover | 3.52 | |
| Borrow Fee | 1.00% | |
| My MC forecast, 3 years | 604.26 M | |
| CAGR | 13.37% | |
| Confidence it is unworkable | 1.50% | # The business model makes no sense |
| Collapse catalyst exists | 2.50% | # Bitcoin can be sold for cash, so cash is not a near-term catalyst |
| No short-squeeze risk | 1.50% | # Medium risk |
| Letmo Score | 7.87% |
Special case. This company is unusual, and many of the metrics I normally use are meaningless here.
| SS calculation | ASST | |
|---|---|---|
| Expiration date | 2028-01-21 | |
| Time to expiration - years | 1.62 | |
| Strike price | 15.00 | |
| Current share price | 14.16 | |
| Credit - worst | -0.45 | |
| Credit - corresponding | 0.10 | |
| Credit - best | 0.65 | |
| Annual return - worst, including fees | 1.59% | |
| Annual return - corresponding, including fees | 4.03% | # This works |
| Annual return - midpoint, including fees | 4.03% | |
| Annual loss - one-way commission | 0.06% | |
| Annual loss - one-way spread | 2.40% |
Decision: open the position at a 1-to-1.9 ratio, with both legs totaling 5%. If the premium increases later, I can keep adding. Rebalance the ratio every Monday afterward to keep Bitcoin Beta = 0.
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-06-10 | BTC | Stock | Buy | 3.28% | |
| 2026-06-10 | ASST | Synthetic | Short | -1.73% |
Decision: create a 10% SATA position. Keep monitoring the Premium afterward.
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-06-11 | SATA | Stock | Buy | 10.00% |
2026-06-12 A problem came up. Fidelity requires 999% margin for shorting ASST, both for SS and a normal Short. There is absolutely no way to do this at scale. I have a Bitcoin long hedge, so the actual volatility would be very small. This makes no sense at all. I called Fidelity and tried to switch to Portfolio Margin, and they rejected me.
2026-06-15 Decision: temporarily reduce the Pair Trade. Adjust the total position to 0.1%, stop using SS, and see what happens later.
The 1,000% ASST margin requirement cannot be solved in the short term. The premium has expanded, and under the original plan I wanted to add, but for now I cannot. This also affects how I can use capital later,
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-06-15 | ASST | Synthetic | Cover | -2.03% | |
| 2026-06-15 | ASST | Stock | Short | -0.04% | |
| 2026-06-15 | BTC | Stock | Sell | 3.43% | 0.06% |
The BTC price at which Common Residual NAV goes to zero is roughly:
Company Current BTC BTC at zero Residual Required BTC decline
ASST $65,148 ~$29,422 -54.8%
MSTR $65,148 ~$24,916 -61.8%
The market will not wait for residual NAV to literally reach zero before reacting. For ASST/SATA, BTC at $45k-$50k could already materially damage asset coverage and confidence in the preferred.
2026-06-18 Fell from 100 to 96. After investigating, I found no additional risk beyond a mild decline in Bitcoin.
- Decision: add to 12%. Sell later after the price returns to 99+.
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-08-18 | SATA | Stock | Buy | 9.53% | 11.99% |
SATA price decline
The recent declines in SATA and STRC were not caused by new information about default or suspended interest. The market is doing three things at once: raising the credit-risk premium, clearing leveraged positions, and rejecting the price anchor near $100.
- 1. BTC fell sharply and asset coverage thinned materially | BTC fell from about $78K to about $60K
- 2. STRC's $100 anchor was proven not to be an anchor
- 3. STRC's rate increases cannot keep up with changes in the risk premium
- 4. Leveraged liquidations really can be an amplifier
- 5. The financing model entered a negative feedback loop
- 6. SATA was dragged down by STRC
- 7. There is a huge amount of trapped supply overhead
Yield repriced to about 14%
- SATA：$13 / $91 ≈ 14.3%
- STRC：$11.5 / $83.5 ≈ 13.8%
Danger signals after adding: coverage keeps falling toward 1.5x, cash reserves decline, dividends are not paid as scheduled, or the company starts issuing preferred at low prices.
Study the specific SATA and STRC contracts.
- For SATA to reduce its current 13% rate, this condition generally must also be met: the average trading price in the previous period cannot be below $99;
Scenario analysis: what happens to ASST and MSTR if Bitcoin keeps falling.
| BTC price | SATA asset coverage | ASST Common Residual NAV | MSTR coverage of all Preferred | MSTR Common Residual NAV |
|---|---|---|---|---|
| $60K | 1.76x | $595M | 2.94x | $30.1B |
| $50K | 1.51x | $396M | 2.40x | $21.6B |
| $40K | 1.25x | $197M | 1.85x | $13.1B |
| $35K | 1.13x | $98M | 1.57x | $8.9B |
| $30K | 1.00x | About $0 | 1.30x | $4.7B |
| $25K | 0.87x | -$101M | 1.03x | About $0.4B |
| $20K | 0.74x | -$200M | 0.75x | -$3.8B |
- ASST common residual reaches zero: BTC about $30,060
- MSTR common residual reaches zero: BTC about $24,500
- - - -
- Can holders force the company into bankruptcy and liquidation? Generally, no. SATA and STRC holders are shareholders, not creditors.
Current holdings:
Total Gain Total Return Exposure Weight
-11,403.40 -6.87% 154,507.56 11.24%
Decision: add SATA to 13.5% and initiate STRC at 2.3%. I do not think I need to run from the preferred yet. But risk, mainly position size, must be controlled.
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-06-24 | STRC | Stock | Buy | 2.27% | 2.49% |
| 2026-06-24 | SATA | Stock | Buy | 11.19% | 13.48% |
Price keeps falling
| Date | Account | Ticker | Type | Action | Quantity | Total amount | Execution price | Current price | Action result % | Action result $ | Position before | Position after |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026-06-11 | Fidelity | SATA | Stock | Buy | 1,351.00 | -132,370.98 | 97.98 | 83.38 | -14.90% | -19,724.60 | 10.00% | |
| 2026-06-18 | Fidelity | SATA | Stock | Buy | 351.00 | -33,685.47 | 95.97 | 83.38 | -13.12% | -4,419.09 | 9.53% | 11.99% |
| 2026-06-24 | Fidelity | STRC | Stock | Buy | 380.00 | -31,209.40 | 82.13 | 74.42 | -9.39% | -2,929.80 | 2.27% | |
| 2026-06-24 | Fidelity | STRC | Stock | Buy | 39.00 | -3,192.93 | 81.87 | 74.42 | -9.10% | -290.55 | 2.27% | 2.49% |
| 2026-06-24 | Fidelity | SATA | Stock | Buy | 353.00 | -31,858.25 | 90.25 | 83.38 | -7.61% | -2,425.11 | 11.19% | 13.48% |
Current total position: 15%.
Total invested cost: $232,317.03
Total loss: -$26,312.96
Total loss rate: -11.33%
Assuming Bitcoin's price does not move, how long can debt and preferred interest be paid?
| Metric | ASST | MSTR |
|---|---|---|
| Cash-only runway | About 1.4-1.5 years | About 0.82 years |
| Time required to fall to 1.5x coverage | About 1.8 years | About 12.6 years |
| Time required to fall to 1.0x coverage | About 5.7 years | About 17.1 years |
| Metric | SATA $85.50 | STRC $76.88 |
|---|---|---|
| Discount to $100 | -14.50% | -23.12% |
| Current cash yield | 15.20% | 14.96% |
| Annualized return with dividends reinvested at the current price | 16.42% | 16.08% |
| Price appreciation from returning to $100 only | 16.96% | 30.07% |
| Return to $100 after one year + full-year dividends | 32.16% | 45.03% |
The market has started demanding a ~16% return before it will lend to these Bitcoin treasuries.
| Metric | SATA / ASST | STRC / MSTR |
|---|---|---|
| Current asset coverage | 1.74x | 2.93x |
| BTC price corresponding to 1.0x coverage | About $30,188 | About $20,213 |
| Required BTC decline from current level | About 49.1% | About 65.9% |
| Major annual cash burden | $101.8M | $1.371B |
| Annual coverage burn | 0.130x | 0.080x |
| After other cash flows / all payments | About 0.123x | About 0.100x |
Insiders. Through what channels can ASST and MSTR insiders funnel benefits to themselves, both channels already used and ones that could appear later? Also, can these continue when Preferred Coverage is below 100%?
| Channel | ASST | MSTR |
|---|---|---|
| Salary and cash bonus | Cole's annual salary increased to $800K; he also received a $2M bonus in 2025 | Saylor's salary is $1; other executives receive normal salaries and bonuses |
| Equity awards | Very significant | Mainly granted to the CEO, CFO, etc.; Saylor has received no new awards in recent years |
| Personal benefits | Security, insurance, and ordinary executive benefits | Saylor security, private aircraft, tax reimbursements, etc. |
| Related-party transactions | Insiders participated in the PIPE; disclosures say they received the same terms as outside investors | Previously paid Saylor for D&O indemnification protection |
| Control | Control group + super-voting rights + controlled-company arrangement | Saylor holds about 37.6% of the voting power |
| Monetizing shares | Registration rights allow controlling shareholders to sell shares | Saylor may sell common when permitted under securities law |
If I had been able to run the SATA Carry and the ASST/BTC pair trade together as originally planned, I would feel a lot more comfortable now. What a shame.
- ASST's premium has compressed to 63%. What a shame. I made absolutely no money on a thesis I was very confident in because of the earlier 1,000% ASST margin requirement.
Think before acting: when the -ASST +BTC side could not be established because of the margin problem, was it a bad idea to build the 16% +SATA +STRC side too early? The two sides were originally supposed to hedge each other to some extent.
Decision: increase the total position to 16%, mainly by adding STRC, which has better coverage and trades farther from par. The Thesis is that coverage is still sufficient and a return to par can produce a good return. Until the other side, -ASST +BTC, is established, I need to be very careful with this side. It is already larger than I wanted. Research and execute the other side as soon as possible.
| Date | Ticker | Type | Action | Position before | Position after |
|---|---|---|---|---|---|
| 2026-06-26 | STRC | Stock | Buy | 2.34% | 3.25% |
Latest premium
The latest premium is only 56% now. It was 83% the first time I calculated it. Aaaaaah, so much money I should have made. Sob, sob.