Darling of the Bear (Strive | $ASST)

company space. And I started my career actually on the buy side over 10 years investing in asset management predominantly equities, long only and long short mandates across emerging and frontier markets. So when I look at companies, I try to use that lens that I was trained with at the time. I have a general tendency I would say to be contrarian when I look at stocks. So actually it was a bit of a difficult decision for me to decide to write about strife because it's anything but contrarian during this bear market. It's actually been the darling of this bear market. But I had to really think long and hard about what I wanted to say and what I would be adding to the conversation when writing that piece. Hopefully it achieved something and hopefully today's space as well will add to that. This is really a starting point I would say for for me at least in terms of where I am with the company. I've been following it obviously for a long time. But I'm expecting that my thoughts will evolve as time goes on. Before I hand it to Matt as well, I just want to lay the groundwork for a couple of concepts because Matt hasn't shared with me yet where we disagree on the piece. I suspect that it might be related to valuation but we'll have to wait and see. I think just taking one step back, we need to kind of just differentiate between liking a company and liking a story with what we're willing to pay for that story. And that's really the lens that I tried to tackle here and the debate that I had with myself when I was writing the piece about strife. These are two different questions because we might love what we're seeing and certainly here there's a lot to like when we look at the story that strife has built in and where it's come and it's far from over of course. But at what price should we be willing to pay for that story? And what are we getting by buying at today's price? And that's really where I'm trying to differentiate between the two because you might say for example that a company like Tesla trades at a very high multiple compared to other Mag 7 stocks and there could very well be reasons for it to trade at a higher multiple of course depending on the growth and what they're planning to achieve down the line. However in some cases the value that they're planning to deliver may also be already for the most part at least baked into the price and there's certain risks that we take with it. So taking it back to strife I like the company and I love the story actually. They actually raised early, they built a mode, they for themselves. They came out with a perpetual preferred right after a strategy came out with stretch so they learned from the inhibition that happened there. They stayed away from debt. They paid down the convert post-semular obviously achieved scale relatively quickly and they set 18 months of dividend reserves before anyone else did and innovated with daily dividends as well. So this is in stark contrast to most of the 2025 pipes who actually went nowhere in the same time. So you can really see the difference in execution when you have a focused and strong team that is very transparent in what they're doing and really thinking ahead. When we look at valuations I kind of look at it with two different ledges so there's two ways to look at it. One is the dollar returns that you expect and if you ask me about the dollar returns you know whether strife is cheap or not I can tell you I expected to reach a hundred dollars, two hundred dollars even a thousand dollars given enough time because I think Bitcoin will get them there and this is a levered claim on Bitcoin. So as long as they don't blow up and they manage the risk well I expect the dollar price obviously to move in that direction over time. But I invest at least in the treasury space and possibly others as well with the idea that we're looking to beat Bitcoin's returns. So the question becomes how much of the return from where we are today is Bitcoin beta and how much is outperformance from today's price or said differently at today's multiple of NAV what growth have I already paid for and where and when do I start to participate in the upside or am I betting on multiple expansion and I think it's important that we know what we're getting and what we're actually expecting from the point that we're coming in at. So breaking it down after netting out the preferred each share owns about 15 dollars or so of Bitcoin and cash. Today let's just call it around 30 dollars or so you're paying about twice what you're getting. So what you should pay of course is partially driven by Bitcoin's cager so what you're expecting in terms of the returns since the leverage is capturing the spread between that return and the carry which is the coupon and the up X that you're paying for by participating in a company like this. That basically tells me that the current stack is worth about let's say between 1.3 and 1.4 times if you expect about a 25% cager going forward and about let's say 1.7 to 1.8 times if you expect about a 50% cager. Now the stock is trading today above both of these levels. So what you're actually paying for is that plus you're betting on the reload of the prefs over time and that obviously depends on the market and the demand for the products over time which I think no one investing in the company obviously should would be doing so unless they expected that market to grow as well. Over time my general thesis is that the multiples should compress towards one both because there's a lot of diminishing returns as you get larger it takes more and more capital to continue achieving Bitcoin per share and Bitcoin is a finite asset and also the potential returns of Bitcoin over time would come down from where they are where we see them today so they get closer and closer to the cost of capital itself that's being raised. With that in mind the constraint really becomes on reloading the demand and we talk always about a credit world which has a huge term in the tens of trillions but the product that we have today is obviously an unrated product it's perpetual and Bitcoin that paper. I would say the whole class is about 13 billion dollars between strategies 10 billion and strives 2 billion roughly speaking versus a high yield market about 1.4 trillion dollars or so most of that money needs ratings to buy and strategy as we know has a B- rating at the moment that may change obviously over time and as it changes I would expect a lot more demand obviously to come into the space. The question is just where that demand comes in and at what price it comes in as well. We can see actually some of the limitations even at the moment say it obviously has seen a lot of success so far. There's also many weeks where it hasn't been able to raise capital at par. Obviously I think I saw very recently a number quoted which is that it traded at par about 25% of the time since listing. We can see obviously with SDRC as well. It's been many months now without reaching par despite a buyback now I expected to get there obviously in time but the demand is not endless and even at these yields we've struggled to reach par in certain periods of time and strive just right sets at an overall over 17% cost to on including all fees and so on. So it does come at a cost. Anyway to conclude on this I think the company is fantastic but we still need to agree in my view that paying one times is not the same as two or three times and we need to be conscious of what we're getting for the different levels. That's pretty much it for my introduction. I'll kind of hand it over to Matt and I'll ask you Matt where you think I got it wrong and we'll take it from there. Thanks for the introduction and appreciate the conversation. I just wanted to give a little context on why I reached out to the Bitcoin Pharaoh to do this and it was because I'm sorry I couldn't quite define but so you put a very long form piece out there. I think it was very thoughtful and I also understand that from an outsider's perspective digging through SEC filing after SEC filing and trying to understand what is going on with the company can be very difficult and I think you've done a better job than most people I've seen publicly in trying to do this for strive in other companies. I also think that conversation and debate is healthy. I think especially when it comes from good intentions and I think that's what I've seen from your posts is that sometimes you take a critical view of different companies out there and say I think what you honestly believe and I can agree with that or disagree with that but I respect that and I think that that is a a place for constructive dialogue and as a company we obviously publish podcasts every single week. I think we're one of the only companies in America that has a lot of its executive team doing a podcast every week whether times are good or times are bad and I think investors deserve that. That your piece was extremely long. I don't plan to go point by point and say I agree with this. I disagree with this. I think we talked about before any conversation is fair game and so I just scrolled it briefly. I'll tell you a few points where I think that maybe there's some context that maybe we're missing and then maybe we can talk about the valuation side more in conversation in Q&A. I think we definitely have seen differently on the valuation of strive the opportunity but maybe just a few points of clarification just kind of doing a quick read to refresh my mind this morning. One would be on the compensation side of things. The vast majority of strives compensation for management is actually tied to beating Bitcoin and I just wanted to kind of explain the differences there. So we have salary, we have short-term incentives, we have long-term incentives, long-term incentives are going to be an annual performance stock award that will be tied to beating Bitcoin and then being one of the top performing companies in a broad-based stock market index but the only way you max out the strategy is by actually the outperforming Bitcoin. That's kind of important and I think that and I understand why it would be confusing reading this. I actually don't think you did a bad job at all. SEC filings are complex. I've tried to lay this out very cleanly in kind of translate a lawyer talk to plain English on X and like a handful of posts over the last few years or last few months. I just given there's been a lot of focus on that but I just wanted to quickly explain that for myself just to make it clear. So when we employed Mercer to kind of do a third-party evaluation prior to us going public the plan was to align incentives and so how that's done for companies is they look at kind of the base layer ownership percentage and they want to make sure that the executives have proper skin in the game to protect the value of the company that is today and so that results in RSU. So like as an example my RSU grant it was determined that I because I was not a founder of the company that my initial ownership percentage was amongst like the bottom-design versus what a CEO of a company going public would normally have and so if you only start and you could debate this but this is just the methodology behind to just so you understand that if you don't have an existing RSU then you're going to potentially be incentivized to do excess risk taking because you don't have any value to protect and so that is kind of when you see like the RSU grant for myself but you know that exists for other people as well that was that grant and I think that gets confused is like like an ongoing grant that that's what you know we're incentivized to do going forward but it's actually going forward on a short-term basis it's a Bitcoin yield and that's a yearly Bitcoin yield trying to and the reason that we as a company focus on Bitcoin yield which I think also gets misunderstood sometimes is that it's just a KPI that we are taking a perpetual bull thesis on Bitcoin that we believe that when our company has success issuing digital credit has success buying Bitcoin by issuing common equity when trading at a premium and trying to positive yield that those types of activities are going to drive long run value and long run performance versus Bitcoin and so we believe that that's kind of in control of management on a year to year basis so that's the short-term incentive and then the long-term incentives is outperforming Bitcoin and and then also being a top-former versus the broad-based stock market because we have a diversified set of institutional investors and that's kind of the overall comp philosophy it's set at 50% versus similar peers in the broader kind of asset management crypto ecosystem and and just to give a sense on context of overall size of that if you were to add for our company salaries short-term incentives and long-term incentives it would be less than 1% of the value of the company per year which we think is you know very fair there's no 20% tax there's no you know anything like that anti-dolution causes anything like that I think it was really worth well thought out on on the comp side people can you know always disagree with you know whatever but I think it's a pretty fair comp but I just wanted to make it clear that that most of the comp is actually tied to outperforming Bitcoin on the the valuation side all