Farside Investors Flags Structural Risks in Strategy’s STRC Preferred Product

Farside Investors said Strategy’s STRC preferred product carries structural risks tied to its adjustable dividend rate and price-stabilization mechanism. According to Odaily, STRC was issued at about $100 and is designed to raise dividends when the price falls below $100 and lower dividends when the price rises above $100, aiming to guide the market price back toward that level. Farside Investors said that if investor concerns about Strategy’s credit risk increase, STRC’s price could decline. It added that raising dividends to support the price could increase cash pressure and further affect investor certainty in valuing the security. STRC recently traded at about $75 before rebounding to $86. Strategy has introduced a Digital Credit Capital Framework that includes plans to build U.S. dollar reserves, raise STRC dividends to 12%, repurchase preferred securities at a discount, and authorize the sale of Bitcoin to help fund dividends and reserves.