Core Viewpoint - Strategy's newly issued preferred stock STRD has shown strong market performance, but its high yield of 11.1% raises concerns about associated risks and returns [1][2]. Group 1: Stock Issuance Details - STRD is a perpetual preferred stock with a 10% coupon rate, issued at $85 (face value $100), and traded at $90, resulting in a current yield of 11.1% [1]. - The initial plan was to sell 2.5 million shares, but due to high investor demand, the offering was expanded to approximately 11.8 million shares [1]. - Company executives, including CEO Phong Le and CFO Andrew Kang, participated in the purchase of shares, indicating management's confidence in the product [1]. Group 2: Financial Context - Strategy has raised approximately $3 billion through preferred stock issuances this year, primarily to increase its Bitcoin holdings [1]. - The company currently holds about 582,000 Bitcoins, representing approximately 3% of the global circulating supply, valued at around $64 billion based on a current price of $110,000 per Bitcoin [1]. Group 3: Risk Considerations - Michael Saylor, the company's executive chairman and major shareholder, describes STRD as a "high-yield" product, while earlier issued preferred stocks STRK and STRF have lower yields and are considered safer [2]. - The prospectus states that dividends on STRD are "non-mandatory" and "non-cumulative," allowing the company to suspend payments without legal repercussions, raising market concerns [2]. - Strategy's annual obligation for preferred stock dividends is approximately $300 million, while its traditional software business generates about $500 million in revenue with minimal free cash flow [2]. Group 4: Supporters' Perspective - Supporters view these preferred stocks as "Bitcoin-backed asset securitization products," with the company's $64 billion Bitcoin value providing substantial backing [3]. - Despite total debt and preferred stock amounting to about $11 billion, the company's "asset coverage ratio" remains high at 6 times [3].